CITIC Construction Investment : accélération de l'intégration régionale, fusion et acquisition en double fil conducteur, réécriture du paysage de l'industrie des valeurs mobilières

CITIC Construction Investment Research reports states that Dongwu Securities is planning to acquire Donghai Securities, marking a new stage in provincial financial resource integration. Since 2025, industry mergers and acquisitions have been densely implemented, forming a dual mainline pattern of top-tier alliances to create first-class investment banks and regional integration led by local state-owned assets to develop domestic leaders. The driving logic has shifted from policy-led to a dual resonance of policy and market, promoting the industry from dispersed competition to tiered stratification. The leading pattern is reconstructed into multiple strong players, with weaker brokers accelerating cleanup, and small- and medium-sized brokers regional integration opening a dislocated development path.

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CITIC Construction Investment: Accelerated Regional Integration and M&A Rewrite Securities Industry Landscape

Dongwu Securities plans to acquire Donghai Securities, initiating a new phase of provincial financial resource integration. Since 2025, industry M&A has been densely realized, forming a dual mainline pattern of strong alliances to build top-tier investment banks and regional integration led by local state-owned assets to develop domestic leaders. The driving logic has shifted from policy-driven to a dual resonance of policy and market, pushing the industry from scattered competition to tiered stratification. The industry’s leading pattern is being reshaped into multiple strong players, with weaker brokers accelerating cleanup, and small- and medium-sized brokers regional integration opening a dislocated development path.

Core Logic of M&A

Event: The first market-based merger and acquisition of state-owned securities firms within Jiangsu Province marks a new stage in provincial financial resource integration. On the evening of March 1, 2026, Dongwu Securities announced a suspension of trading due to plans for major matters, stating it intends to acquire control of Donghai Securities via issuing A-shares, with trading halted from March 2 for no more than 10 trading days. Dongwu Securities is a state-owned broker in Suzhou, a longstanding listed broker, while Donghai Securities is a state-owned broker in Changzhou listed on the New Third Board. The merger of these two brokers is the first case of market-based M&A of state-owned securities firms within Jiangsu Province. Against this background:

1. The trend of securities industry M&A is gradually showing a dual mainline pattern, with industry concentration accelerating. The two main lines—“top-tier strong alliances to create first-class investment banks” and “local state-owned assets leading regional integration to develop local champions”—have become core features of this round of M&A. Since 2025, there have been 11 M&A cases, the densest in the past decade. 1) Top-tier consolidation: Guotai Junan completed its merger with Haitong Securities; China International Capital Corporation announced the absorption and merger of Dongxing Securities and Cinda Securities, all large-scale consolidations of comprehensive brokers responding to regulatory calls to cultivate internationally competitive first-class investment banks; 2) Regional integration: led by local state-owned assets, regional financial resource integration is a key incremental driver. Cases include Dongwu Securities’ planned acquisition of Donghai Securities, Western Securities’ acquisition of Guorong Securities, and Guosen Securities’ acquisition of Wanhua Securities, all focusing on regional broker resource integration, which can resolve homogeneous competition and gather local resources to build regional leaders.

2. The driving logic of M&A is shifting from policy-driven to a dual resonance of market and policy, with M&A possibly becoming a rigid development need for brokers. Historically, broker M&A was mainly driven by regulatory policy to mitigate risks, but this round involves proactive choices by market entities aligned with policy guidance. On one hand, the decline in fee rates for light-capital businesses and the rising capital thresholds for heavy-capital businesses have squeezed profit margins for small- and medium-sized brokers, making integration essential for competitive advantage; for some brokers, M&A has shifted from an optional action to a development necessity. On the other hand, since the new “Nine Regulations” and subsequent policies support brokers through M&A restructuring to strengthen and optimize, providing institutional guarantees and creating a virtuous cycle.

Core Impact of M&A

From an industry impact perspective, the current wave of broker M&A centered on top-tier alliances and regional state-owned asset integration is gradually rewriting the traditional “big but not strong, small and dispersed, homogeneous internal competition” pattern that has persisted for years, accelerating the industry’s shift from “pyramid-shaped dispersed competition” to “tiered stratified competition.” Specifically:

1. The restructuring of top-tier broker tiers, shifting from “one super, many strong” to “multiple strong players,” with internationalization becoming the new core competition track. For a long time, China’s securities industry maintained a “one super, many strong” pattern led by CITIC Securities. In this wave of industry M&A, Guotai Junan and Haitong Securities have completed their merger, and China International Capital Corporation’s plan to merge Dongxing Securities and Cinda Securities is in subsequent stages, officially entering a “multi-strong” era.

Previously, except for a few institutions, the competition focus of top-tier brokers was mainly on domestic market share, with prominent homogeneous internal competition. After integration, more top-tier brokers will have the capital strength to compete with international investment banks; additionally, regulatory goals to develop 2-3 internationally competitive first-class investment banks suggest that top-tier brokers’ international expansion will receive stronger support. With the new pattern taking shape, the core competitive boundary of top-tier brokers extends from domestic to global markets, potentially opening a new stage of benchmarking against top international investment banks.

2. Accelerated cleanup of weaker institutions, regional brokers forming alliances to build a dislocated second echelon. The ongoing wave of industry M&A deepens, with extreme differentiation in its impact on small- and medium-sized brokers: homogeneous weaker brokers lacking core competitiveness face continuous squeeze and survival crises; meanwhile, regional or specialty brokers leveraging regional advantages or niche capabilities find new development paths through regional integration or boutique transformation, leading to a deep reshuffle of the sector.

Historically, the securities industry relied on license scarcity, forming an ecosystem where “holding a license sufficed for survival.” Even weak brokers could maintain basic operations via traditional channels. Under this wave of M&A, license resources are accelerating toward top-tier and regional leaders. For weaker brokers lacking shareholder backing, local competitive barriers, or specialized business support, relying solely on traditional channels is no longer sustainable, and their survival space is continuously squeezed.

On December 6, 2025, CSRC Chairman Wu Qing explicitly stated in a speech at the China Securities Industry Association: “First-class investment banks are not exclusive to top-tier institutions or ‘patents’. Small and medium-sized institutions should also leverage advantages and develop dislocated niches, focusing resources on segmented fields, specialized client groups, and key regions to build ‘small but beautiful’ boutique, specialty, and service-oriented investment banks,” providing clear policy guidance for small- and medium-sized brokers to break through via regional deep cultivation and specialized development.

Against this backdrop, regional financial resource integration led by local state-owned assets opens a development path for domestic small- and medium-sized brokers to band together and break through. Under the coordinated promotion of state-owned shareholders, regional small- and medium-sized brokers can integrate local branches, clients, industrial resources, and capital to focus on building regional leaders; the integrated institutions can not only access major local projects, listed companies, and high-net-worth regional clients but also establish “regional moats” difficult for national top-tier institutions to shake. These regional leaders need not compete homogeneously across all sectors with top-tier brokers but can focus on deep local market engagement and regional economic integration, ensuring stable revenue and profit, becoming key financial carriers supporting high-quality local economic development. As regional financial integration continues across provinces, such institutions will gradually grow into the industry’s second echelon, dislocated from national leaders.

Market Price Fluctuation Uncertainty: Many factors influence capital market prices, including macroeconomic fluctuations, global economic changes, and investor sentiment, which can trigger stock price movements or impact valuations of brokers, insurers, and other institutions. The performance of banking and financial industries is more affected by market prices and trading volumes.

Uncertainty in Corporate Profit Forecasts: Profits in securities and insurance sectors are affected by multiple factors; forecasts of industry valuation and performance carry uncertainties, and intensified internal competition may lead to deviations in predictions.

Technological Innovation and Iteration: Rapid development of emerging technologies requires financial institutions to continuously adapt, but accelerated technological updates entail high R&D and talent training costs, potentially increasing operating costs for brokers and insurers. The burst of technological innovation also involves uncertainties.

（Source: Yicai）