CITIC Construction Investment: Accelerating regional integration and mergers and acquisitions, rewriting the securities industry pattern

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that Dongwu Securities (601555.SH) is planning to acquire Donghai Securities to begin a new stage in integrating financial resources in the province. Since 2025, industry mergers and acquisitions have been implemented intensively, forming a dual main line pattern of leading investment banks and local state-owned assets leading regional integration to create local leaders. The driving logic shifts from policy dominance to two-way resonance between policy and market, driving the industry from decentralized competition to hierarchical stratification. The head pattern has been restructured to become multi-strong, the bottom brokerage firms have been cleared up at an accelerated pace, and regional integration of small and medium-sized brokerage firms has opened up a misaligned development path for them.

CITIC Construction Investment's main views are as follows:

The core logic of mergers and acquisitions

Incident: The first market-based merger and acquisition of domestic brokerage firms in Jiangsu Province, beginning a new stage of integration of provincial financial resources. On the evening of March 1, 2026, Dongwu Securities issued a suspension notice on planning important matters, announcing that it plans to acquire control of Donghai Securities by issuing A-shares. Trading will be suspended from March 2, and is expected to be suspended for no more than 10 trading days. Dongwu Securities is a state-owned brokerage firm in Suzhou and an established listed brokerage firm. Donghai Securities is a state-owned brokerage firm in Changzhou and listed on the New Third Board. The merger of the two brokerage firms is the first case of market-based merger and acquisition of domestic securities firms in Jiangsu Province. In this context:

1. The trend of mergers and acquisitions in the securities industry is gradually showing a parallel pattern of two main lines, and industry concentration is increasing at an accelerated pace. The two main lines of “leading companies join forces to build first-class investment banks” and “local state-owned assets lead regional integration to create local leaders” have become the core features of this round of mergers and acquisitions. Since 2025, there have been 11 mergers and acquisitions in the industry. The concentration level is the highest in nearly ten years. 1) Leading integration side: Guotai Junan completed the merger of Haitong Securities, and CICC disclosed the absorption and merger of Dongxing Securities+Cinda Securities, all large-scale integration of large comprehensive brokerage firms in the industry, directly responding to the call for supervision and cultivating first-class investment banks with international competitiveness; 2) Regional integration side: the integration of local financial resources led by local state-owned assets is a core increase in this round of mergers and acquisitions. Dongwu Securities plans to acquire Donghai Securities, Western Securities's acquisition of Guorong Securities and Guoxin Securities, all focusing on cases such as regional brokerage firms Resource integration can, on the one hand, resolve the problem of homogenized competition, On the other hand, it can also gather local resources to create regional leaders.

2. The driving logic of mergers and acquisitions is shifting from being policy-driven to a two-way resonance between the market and policy. Mergers and acquisitions may become an immediate need for brokerage development. Historical brokerage mergers and acquisitions are mostly policy risk mitigation led by regulation, and this round of mergers and acquisitions is a two-way resonance between active choices and policy guidance by market players. On the one hand, rates for light capital businesses are declining, and the capital threshold for heavy capital businesses continues to rise, and the profit margins of small and medium-sized brokerage firms are being compressed, making it difficult to enhance competitive advantage. For some brokerage firms, mergers and acquisitions have changed from “optional actions” to “immediate development needs”; on the other hand, since the new “National Nine Rules”, a series of policies have supported brokerage firms to become stronger and better through mergers, acquisitions and restructuring, providing institutional guarantees for mergers and acquisitions, forming a virtuous circle.

The core impact of mergers and acquisitions

From the perspective of industry influence, this round of brokerage mergers and acquisitions, with strong alliances and regional state-owned assets integration as the core, is gradually rewriting the traditional competitive pattern of “big but not strong, small but scattered, and homogenized internal volume” in the securities industry for many years, and is accelerating the transformation of the industry from “pyramid decentralized competition” to “hierarchical hierarchical competition”. More specifically:

1. The leading brokerage hierarchy has been restructured, shifting from “one super, many strong” to “multiple strengths”, and internationalization has become a new track for future core competition. For a long time, China's securities industry has maintained a “one super many strong” competitive pattern led by CITIC Securities. Meanwhile, in this wave of industry mergers and acquisitions, Cathay Pacific Junan and Haitong Securities have completed the merger and implementation, CICC's plan to integrate Dongxing Securities and Cinda Securities has entered a follow-up process, and the industry has officially entered a new era of “multiple strengths.”

Previously, with the exception of a few institutions, the competitive focus of leading brokerage firms had long been concentrated on competition for domestic market share, and the problem of homogenization was prominent; after integration, on the one hand, more leading brokerage firms had the capital strength to compete with international investment banks; on the other hand, the goal set by the regulatory authorities to build 2-3 first-class investment banks with international competitiveness meant that the international layout of leading brokerage firms was expected to receive stronger support. With the formation of the new pattern, the core competitive boundaries of leading brokerage firms are fully extended from the domestic market to the global market, and it is expected that they will officially begin to develop in parallel with world-class investment banks.

2. The market-based clean-up of the tail institutions is speeding up, and regional brokerage firms are integrating to form a second tier of misplaced competition. The current wave of industry mergers and acquisitions continues to deepen, and the impact on the small and medium brokerage groups is characterized by extreme differentiation: the living space of homogenized brokerage firms lacking core competitiveness continues to be squeezed and faces a serious existential crisis; while small and medium-sized brokerage firms with regional advantages or special capabilities have found new development paths through regional integration or boutique transformation, and the small and medium brokerage groups in the industry have ushered in a deep reshuffle.

In the past, the securities industry relied on the scarcity of licenses to form an industry ecosystem where “you can survive if you have a license”. Even if lacked core competitiveness, brokerage firms were able to rely on traditional channel businesses to maintain basic operations. However, under the current wave of industry mergers and acquisitions, license resources are being concentrated at the top and regional leaders. For last-tier brokerage firms that lack shareholder endorsements, territorial competition barriers, and characteristic business support, and only rely on traditional channel businesses to survive, the original development model is completely unsustainable, and living space continues to be squeezed.

On December 6, 2025, Chairman Wu Qing of the Securities Regulatory Commission clearly stated in his speech at the China Securities Association: “First-class investment banks are not the “exclusive” or “patents” of leading institutions. Small and medium-sized institutions must also seize advantages and misplaced development, concentrate resources and work hard in segmented areas, characteristic customer groups, key regions, etc., and strive to create “small but beautiful” boutique investment banks, specialty investment banks, and characteristic service providers.” It provides clear policy guidelines for small and medium-sized brokerage firms to break through through deep regional cultivation and characteristic development.

In this context, the integration of regional financial resources led by local state-owned assets has opened up a development path for small and medium-sized local brokerage firms to break through in groups. Under the overall impetus of state-owned shareholders, small and medium-sized brokerage firms in the region can concentrate their efforts to build leading local brokerage firms by integrating territorial outlets, customers, industrial resources and capital; integrated institutions can not only obtain resource preferences from major local government projects, local listed companies, and regional high-net-worth customer groups, but can even build a “regional moat” that is difficult for leading national institutions to shake. Leading regional brokerage firms do not need to engage in full-circuit homogenization rivalry with leading brokerage firms; they only need to deeply cultivate the local market and be deeply tied to the regional real economy to obtain stable revenue and profit support, and become the core financial vehicle for the high-quality development of the local economy. In the future, as regional financial integration in various provinces continues to advance, such institutions will gradually develop and expand, forming the second tier of the industry that misplaced competition with leading national brokerage firms.

Risk Alerts

Uncertainty about market price fluctuations: There are many factors affecting capital market prices, including macroeconomic fluctuations, changes in the global economic situation, and fluctuations in investor sentiment, which may cause changes in stock prices or affect the valuations of institutions such as brokerage firms and insurance companies. The performance of the non-banking financial industry is greatly affected by market prices and transaction volume.

Uncertainty in corporate profit forecasting: Profits in the securities and insurance industry are affected by various factors. The report has some uncertainty about industry valuation and performance predictions. In addition, increased competition within the industry may also cause deviations in forecast results.

Technological innovation and iteration: The rapid development of emerging technology requires financial institutions to continuously follow up and adapt to the pace of technological change. However, the rapid pace of technology update and iteration has also brought high R&D investment and talent training costs, which may increase the operating costs of brokerage firms and insurance companies. At the same time, the explosion of technological innovation is uncertain.