by CHEN Jing

China's securities firms are rapidly expanding overseas, with offshore businesses emerging as a core earnings driver and reshaping industry competition, according to 2025 annual filings.

Cross-border operations now account for a growing share of revenue, supported by increased capital allocation and the expansion of overseas units.

By end-2025, 34 mainland brokerages had set up 36 offshore subsidiaries with total assets of HK$1.94 trillion (about US$248 billion), up nearly 32% year on year, generating HK$45.23 billion in revenue, according to the Securities Association of China (SAC).

Offshore units typically deliver higher returns and operate with greater leverage, with profitability at leading firms significantly above group levels. CITIC Securities International reported a return on equity of 25%, while CICC International posted 15.86%.

Regulators have also signaled stronger support for overseas expansion, urging brokerages to enhance cross-border capabilities and global capital allocation.

That policy push has triggered a wave of capital injections into offshore units, now seen as the primary vehicle for balance sheet expansion. Since 2025, firms including CSC Financial, CMS Securities and Huatai Securities have announced funding for Hong Kong subsidiaries. CSC Financial completed a HK$1.5 billion capital increase, while CMS Securities plans up to HK$9 billion in staged injections.

The momentum has continued into 2026. Huatai Securities plans to inject up to HK$9 billion into its offshore arm, while GF Securities has raised more than HK$6.1 billion through H-share placements and convertible bonds, all earmarked for overseas expansion.

The industry's competitive ranking has shifted following asset disposals and consolidation. Huatai Securities' sale of its U.S. unit weighed on its positioning, while the merger of Guotai Junan and Haitong Securities has created a new combined player, intensifying competition in offshore markets.

Overseas business is becoming more material to overall revenue. In 2025, the top four brokerages each derived more than 10% of total revenue from international operations.

CICC led with a 29.47% share, followed by CITIC Securities at 20.73%, Huatai Securities at 16.53%, and Guotai Haitong at 15.19%.

CITIC Securities International reported record results, with revenue up 48% and net profit rising 72%, while ranking first in offshore bond underwriting among Chinese issuers and second in Hong Kong IPO sponsorship.

CICC showed stronger profit dependence on overseas business, with its offshore arm contributing 45.63% of group net profit. International revenue rose 58.11% to RMB 8.39 billion (US$1.23 billion), ranking first in Hong Kong IPO underwriting.

Huatai Securities reported a decline in international revenue due to one-off disposal effects, but adjusted figures showed underlying growth of 23.82%.

The merger-driven Guotai Haitong has become a key variable. Its Hong Kong units generated more than HK$12 billion in combined revenue, though Haitong International remained loss-making, reporting a net loss of HK$3.27 billion and negative equity at year-end.

Smaller players are also gaining ground. GF Holdings (Hong Kong) and CSC Financial International both doubled revenue in 2025, with the latter's net profit surging 178% after a HK$1.5 billion capital increase.

Investment banking and wealth management have become the main growth drivers of offshore business. A surge in Hong Kong capital markets activity in 2025 helped Chinese brokers dominate IPO underwriting, cross-border M&A and offshore bond issuance.

Wealth management is also emerging as a key growth area, with firms building cross-border platforms offering family office services, discretionary accounts and products linked to cross-border investment schemes.

Brokerages are shifting from broad global expansion to a more targeted strategy centered on Hong Kong, extending into Southeast Asia and selectively into Europe and the United States.

ZHAO Xijun of Renmin University of China said growing capital market opening and outbound demand from Chinese firms — including overseas listings, bond issuance and M&A — are creating opportunities for global expansion.

However, risks remain. Firms face rising compliance challenges, including regulatory differences, anti-money laundering requirements, cross-border data rules and tax considerations. Differences in market structure and investor behavior also add complexity.

The next phase will test whether Chinese brokerages can scale globally while managing risk — and narrow the gap with international investment banks.