China's soaring stock markets have propelled Citic — not to be confused with Citi of the US — to become the world's fourth largest broker behind Goldman Sachs, Morgan Stanley and Merrill Lynch.
Beijing-based Citic has a market capitalisation of more than $40bn — more than Lehman Brothers, Bear Stearns and Charles Schwab — having put on $30bn in the current year.
China's four listed brokers — Citic, Haitong, Hong Yuan Securities and Northeast Securities — have soared an average of 500 percent this year.
The achievement could oh so easily be lost if China's stock markets plunge. Even if they do not, a rating of 34 times earnings looks unsustainable in the long term as Citic's US peers typically trade on eight times earnings.
China's four listed brokers — Citic, Haitong, Hong Yuan Securities and Northeast Securities — have soared an average of 500% so far this year. China's benchmark CSI 300 Index has climbed a relatively pedestrian 163% in 2007.
Bloomberg notes that Citic's rise is reminiscent of that achieved by Japan's mighty Nomura in the late 1980s, when the Tokyo-based company became the world's largest securities firm. Nomura's shares plunged in the following decade as Japan's bubble economy burst.
The current rally in China has propelled Beijing-based Industrial & Commercial Bank of China (ICBC) past Citigroup, or Citi as it prefers to be known, as the world's largest bank by market value, and Air China Ltd. past Singapore Airlines as the largest carrier.
Elsewhere on the finance front:
- China Construction Bank raised 58bn yuan via the IPO in Shanghai this week, making it the largest IPO in China to date. According to reports, the IPO drew subscriptions valued at a phenomenal 2.26 trillion yuan, highlighting the huge underlying demand from mainland investors.The shares jumped by as much as 40% on their first day, although that no doubt disappointed investors who have enjoyed first-day “pops” of 250% or more from the last six IPOs on the mainland.