(Yicai) Feb. 19 -- China's finance ministry said last week that it will shift ownership of the country's three biggest state-owned bad debt managers to a unit of sovereign wealth fund China Investment Corporation, prompting speculation about a new wave of mergers and acquisitions in the brokerage sector.

The ministry plans to transfer its 58 percent stake in China Cinda Asset Management, 71.6 percent in China Orient Asset Management, and 73.5 percent in China Great Wall Asset Management to Central Huijin Investment, the three so-called 'bad banks' announced separately on Feb. 14.

The expanded lineup of brokerages under Central Huijin could stoke expectations for further integration in the securities industry, as government policy seeks to support leading financial institutions in raising their game through M&As, organizational innovation, and other means, said Xu Yizhou, chief non-bank analyst at Industrial Securities.

Guotai Junan Securities also received approval from China’s securities regulator last month to absorb Haitong Securities, giving the final go-ahead to a deal that will create the country’s biggest securities firm with assets of about USD230 billion. Consolidation in the industry is aimed at enhancing competitiveness and profitability.

M&As in the sector will likely speed up, according to Sun Yin, chief non-bank analyst at Western Securities. Combinations of brokerages with similar shareholder backgrounds or registered locations may be easier to do, Sun noted.

Further integration of brokerage assets is possible under Central Huijin, Sun pointed out, adding that attention should be paid to the integration of financial licenses of companies under Central Huijin to reveal potential merger clues.

Following the transfer of equity in the bad banks, control of Dongxing Securities and Cinda Securities will pass to Central Huijin, increasing the number of brokers under its umbrella to eight, including several leading and small and medium-sized securities firms. Its shareholding in Shenwan Hongyuan and others will also increase after the transfer.

Editors: Tang Shihua, Martin Kadiev