In the shoals of China's little-known stockbrokers, fast-growing firms like Southwest Securities may soon find themselves in the glare of a consolidation spree triggered by Beijing's drive to modernize the country's financial industry.
Nearly doubling profits last year on a stock market boom, Southwest is one of the more than 120 brokerages in China that will have to live with government plans to allow commercial banks and other finance firms to own a brokerage licence. The new rules are expected later in 2015, part of moves to open up capital markets and bolster China's sagging economic growth.
After a stellar 2014 - securities firms' profits more than doubled to $16 billion - Chinese brokerages are now bracing for the impact of newcomers by lining up to raise billions of dollars in funds to expand margin trading and other businesses. A series of takeovers is about to be unleashed, insiders say.
"Mergers between banks and securities companies, insurers and banks, or insurers and securities companies are all likely to show up," Wang Dongming, chairman of China's largest brokerage, CITIC Securities Co , said at a recent news conference. "The strong will become stronger, and the weak will become weaker."