(Yicai) Feb. 27 -- Shares of China International Capital Corporation and China Galaxy Securities moved in opposite directions on the Shanghai and Hong Kong stock markets today after both firms denied a media report of a planned merger that would create China’s third-largest brokerage.

In Shanghai, CICC [SHA: 601995] closed up 6.7 percent at CNY38.80 (USD5.34) a share, while Galaxy [SHA: 601881] jumped 10 percent to end at CNY17.82 (USD2.45). Both climbed by their 10 percent daily trading limits yesterday.

In Hong Kong, CICC [HKG: 3908] finished down 3.5 percent at HKD15.66 (USD2.01), after soaring by more than 19 percent yesterday. Galaxy [HKG: 6881] fell 1.6 percent to HKD8.62 (USD1.11), following a 17 percent surge the previous day.

CICC said late yesterday that the broker has not heard anything from government departments, regulators, or shareholders about a merger with Galaxy, and the company has confirmed with its controlling shareholder Central Huijin Investment that there are no major matters that should be disclosed. Galaxy also denied the reported merger last night.

Reuters reported yesterday, citing five sources, that CICC and Galaxy would combine through a stock swap to create a behemoth with assets of USD193 billion. The merger has been approved by regulators and may be announced in the coming weeks, it added.

China's securities industry has seen a wave of large-scale mergers and acquisitions since last year, notably with Shanghai-based Guotai Junan Securities and Haitong Securities combining in October to form the country’s largest broker with assets in excess of CNY1.6 trillion (USD220 billion).

Both CICC and Galaxy are controlled by Central Huijin, a Chinese sovereign fund company. It owns about 40.2 percent of CICC and 32.8 percent of Galaxy. As of Sept. 30, CICC had total assets of CNY655.4 billion (USD90.2 billion), compared with Galaxy’s CNY747.9 billion.

In the first three quarters of last year, CICC's net profit tumbled 38 percent to CNY2.9 billion (USD399 million) from a year earlier, while revenue dropped 23 percent to CNY13.4 billion (USD1.8 billion). Galaxy's net profit rose 5 percent to CNY7 billion on a 6 percent increase in revenue to CNY27.1 billion.

Editor: Emmi Laine