Underperforming Chinese capital markets halve security firms’ profits in 2011

China’s capital markets performed dismally last year (2011) and this had an impact on the performance of securities firms in the country with their profits going down by nearly 50%, an industry association figures have shown.

Securities companies in the south Asian country made an annual profit of RMB 39.4 billion (USD 6.24 billion) last year, half of what they made in 2010, the Securities Association of China (SAC) said.

According to SAC, 109 securities firms managed to achieve an operating income of RMB 136 billion in 2011, a 30% drop from the RMB 193 billion earned the previous year.

However, brokerage business still managed to make the largest contribution to the income despite the sharp year on year decline managing to bring in RMB 68.9 billion to the industry last year, down from RMB 107.6 billion the previous year.

The Chinese securities industry total assets shrank by 0.46 billion yuan between 2009 and 2011 thanks to underperformance of the country’s securities markets. Net profits dropped to RMB 39.4 billion from RMB 93.3 billion in the same period.

Due to weak external demand, slowing real-estate sector and tightened bank lending, the Shanghai Composite Index went down 21.68% in 2011.The Shenzhen Component Index dropped 28.41% cumulatively last year.