Guotai Junan Securities, China’s third-largest brokerage, and five other securities firms have applied for approval to sell shares for the first time, Bloomberg reported, citing filings posted on the regulator’s website. They hope to raise more than US$6.2 billion to fund new, capital-intensive services such as offering clients securities lending and margin financing, and to avert what Guotai Junan terms “a survival crisis” for the industry. China’s securities firms, which make most of their money executing trading orders for retail clients, have seen profitability plunge to about one-eighth of 2007 levels as trading commissions drop amid investors’ disenchantment with equities.
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