Analysis of the Reasons for the Decline in Guosen Securities' Investment Banking Revenue

Based on the searched information, I analyze the main reasons for the continuous decline in Guosen Securities’ investment banking revenue for you:

China’s IPO market has declined sharply since reaching its peak in 2021-2022. Data shows that the A-share IPO market remained sluggish in 2024, with both the number of new stock issuances and financing scale decreasing significantly. As a securities firm whose main revenue source is IPO sponsorship business, Guosen Securities is directly impacted by the market contraction [0].

Capital market activities including IPO, additional issuance, rights issue have decreased significantly, leading to general pressure on investment banking revenue. In the first half of the year, Chinese securities firms achieved operating revenue of RMB 203.3 billion, a year-on-year decrease of 9% [0].

Regulatory authorities have stricter IPO review, longer project cycles, and lower approval rates. At the same time, the punishment for investment banking violations has been increased, leading to higher compliance costs.

Chinese investment bankers are facing pressure from anti-corruption rectification, with some securities firm executives being placed under residential surveillance. This reflects the regulatory authorities’ strict rectification of capital market order [0].

Against the backdrop of market contraction, leading securities firms have further concentrated their market share relying on stronger research pricing capabilities and sales network advantages. Medium-sized securities firms like Guosen Securities are facing greater competitive pressure [0].

In response to changes in the market environment, the company may actively adjust its business structure and reduce the application of low-quality projects, but this leads to a decline in investment banking revenue in the short term.

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: The continuous decline in Guosen Securities’ investment banking revenue is the result of multiple factors, including the IPO market contraction brought by the macroeconomic cycle, compliance pressures from changes in the regulatory environment, and challenges from adjustments in the industry competition pattern. This trend was particularly prominent in 2024, and a fundamental improvement is not expected in the short term.

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