Source of this article: Times Finance Author: Lu Zeqiang
The first half of 2024 has ended, and this half year is full of severe challenges for brokerage and investment banks.
Due to the phased tightening of IPOs and the implementation of new refinancing regulations since the second half of 2023, the equity financing market has weakened, and the investment banking business of various securities firms has also declined significantly. Not only is equity underwriting deserted, but the bond underwriting business has also unexpectedly shrunk slightly.
In this regard, Jiang Han, a senior researcher at Pangu Think Tank, told Times Finance that in the case of a decline in the scale of equity underwriting and bond underwriting, the investment banking business of securities companies needs to find new growth points. M&A may be a new business growth point, in addition, brokerages can also expand other business areas, such as asset management, investment consulting, etc., to improve overall business income and profitability.
Image source: Picture Worm Creative
The equity underwriting scale of the top 10 brokerages shrank by more than 75%
Under the adjustment of strict supervision and marketization, the financing of A-shares will cool down significantly in the first half of 2024.
Wind data shows that according to the issuance date, the equity financing amount in the first half of 2023 will be 623.344 billion yuan, and as of June 28, 2024, the equity financing amount will be 133.873 billion yuan, a year-on-year decrease of 78.52%; The number of equity fundraisers dropped to 119 from 404 in the first half of 2023.
Financing is cold, and the equity underwriting business of securities companies is naturally greatly affected.
According to the Wind equity underwriting ranking, calculated by the date of issuance, as of June 28, 2024, the total underwriting scale of the top ten equity underwriting brokerages is 102.120 billion yuan (accounting for 84.94% of the total underwriting scale), a decrease of 75.61% from 418.735 billion yuan in the first half of 2023; The number of underwriters in the top 10 brokerages decreased to 103 from 278 in the first half of 2023.
GF Securities and Guojin Securities, which have the brightest performance in equity underwriting in the first half of 2024, will be ranked 5th from 12th in 2023, and the latter will be squeezed from 11th in 2023 to 4th.
Image source: Wind
However, the sluggish equity underwriting situation is expected to ease.
Since the beginning of this year, as of June 19, the IPOs of all sectors of the Shanghai and Shenzhen Stock Exchanges have been in the state of "zero acceptance", and only the Beijing Stock Exchange has accepted the listing applications of 2 companies in the first quarter. On the evening of June 20, the Shanghai and Shenzhen stock exchanges resumed IPO acceptance; On June 21, the Beijing Stock Exchange also restarted IPO acceptance. The three major exchanges resumed IPO acceptance almost simultaneously, and many market participants believe that this is a signal that IPO issuance will return to normal.
However, at present, the Shanghai Composite Index has not returned to 3,000 points, Jiang Han told Times Finance, "The Shanghai Composite Index below 3,000 points may cause market concerns, and investors' enthusiasm for new shares may be reduced, which will affect the IPO subscription rate and market performance." In addition, poor market movements may lead to the postponement or cancellation of IPO plans by pre-listed companies, reducing the number of IPOs accepted by the exchange. However, from a long-term perspective, short-term fluctuations in the market should not be a major obstacle to IPO acceptance, and the resumption of IPO acceptance by the three major exchanges is conducive to the diversification of the market and the expansion of the company's financing channels. ”
The scale of bond underwriting shrank slightly
The significant reduction in the equity underwriting business of investment banks may be made up by the bond underwriting business.
Jiang Han believes that "when the IPO and refinancing markets are relatively cold, some capital demanders may turn to the bond market for financial support; Second, the bond market is relatively stable and low-risk, which may be more attractive to investors. However, it also depends on the specific market environment and policy guidance, as well as the affordability and investor demand of the bond market. ”
It is worth noting that in the first half of 2024, the scale of bond underwriting by securities firms also shrank slightly.
According to Wind data, from 2024 to June 29, the total bond underwriting scale of brokerages will be 6,089.203 billion yuan, down 1.85% from 6,203.802 billion yuan in the first half of 2023. However, the total underwriting scale of the top 10 brokerage bonds was 4,029.379 billion yuan, a slight increase of 0.33% over the first half of 2023.
Image source: Wind
Jiang Han told Times Finance, "In the first half of this year, the main reasons for the slight year-on-year decline in the bond underwriting scale of brokerages, I think it may include the fluctuation of market interest rates, investors' concerns about the risk of the bond market, and the impact of the economic environment that has led to a decrease in demand for corporate bond issuance." In addition, the broker's own business strategy and market positioning may also have an impact on the scale of bond underwriting. ”
In addition, from the perspective of subdivision, the scale of local bond underwriting has shrunk significantly. In 2024, the total underwriting scale of local government bonds of securities firms will be 1,479.092 billion yuan, down 12.29% from 1,686.326 billion yuan in the first half of 2023.
"In the case of the decline in the scale of equity underwriting and bond underwriting, the way out of the investment banking business of securities companies needs to find new growth points. M&A and restructuring may be a new business growth point, because the M&A and restructuring market has great potential and development space. In addition, brokerages can also expand into other business areas, such as asset management, investment consulting, etc., to improve overall business revenue and profitability. At the same time, strengthening internal management and risk control is also an important guarantee for the sustainable development of the investment banking business of securities companies," Jiang Han told Times Finance.