China merchants.jpgHere's one firm hoping that China's equity bubble is not going to explode anytime soon. China Merchants Securities, one of the country's top ten stockbrokers, hopes to raise around 6bn yuan in a domestic initial public offering toward the end of this year, according to Dow Jones.

China Merchants Securities said earlier this month it hired the domestic brokerage arms of Goldman Sachs and UBS to underwrite the offering. The two local ventures managing the offering are called Goldman Sachs Gao Hua Securities Co. and UBS Securities Co — the only western brokers currently allowed to operate in China.

China Merchants Securities is hoping an IPO will raise its profile in the crowded domestic brokerage market — the last broker to list on the domestic market was Citic Securities in 2002.

China's local securities firms are generally seen to be easy pickings for big foreign firms as they are small and have grown up in a sheltered environment with no foreign competition. While foreign firms are currently banned from investing in domestic players, analysts expect a wave of mergers and acquisitions once that ban is lifted, much like the consolidation that followed the deregulation of London's stock market — the so-called Big Bang — back in 1986.

China Merchants Securities was formed in 1991 as the investment banking department of China Merchants Bank, which listed on China's A share market in 2002. The holding company China Merchants Group has 11 subsidiaries operating in the in the financial sector. More on China Merchants Bank here

email