Rising brokerage earnings indicate Chinese stock market comeback

Chinese brokerage firms estimated rising profits in March, signaling active trading in the stock market.

A total of 28 listed brokerages have estimated soaring month on month profits for March, continuing the upward momentum since the beginning of this year.

The brokerages, accounting for the majority of the country's publicly traded securities firms, reported combined net profits of 10.97 billion yuan (1.59 billion U.S. dollars) in their preliminary earnings estimates for March, a 153-percent increase month on month.

Northeast Securities, for example, estimated that its profit would be more than 17 times that in February.

Their total revenues jumped 81.78 percent to 20.25 billion yuan, with nine brokerages seeing revenues double in March.

The rising profits of brokerages indicate active trading in the stock market as investors restore confidence, according to analysts.

Chinese shares have been gradually recovering in line with the firming trend of the overall economy. The benchmark Shanghai Composite Index stood at 3,288.97 points Tuesday, up 8.4 percent from a year ago.

The steady recovery was coupled with regulator vows to curb illicit practices of listed firms, making sure the stock market heads to a direction where investors focus on sustainable growth.

"The recent crackdown on insider trading as well as other illicit practices indicated regulators' firm stand on guiding investors to focus on blue-chip shares, or those with sound fundamentals," said Yang Delong, chief economist of First Seafront Fund, a Shenzhen-based investment firm.

As the stock market heads for a healthy recovery, investors should remain cautious and avoid aggressive investment patterns that only focus on short-term gain, analysts warned. Endi