Guotai Junan to acquire smaller rival Haitong via share swap
Shares of China brokerages jump on hope of more mergers
Beijing has dialled up rhetoric on domestic brokerage mergers
Analysts say more brokerage mergers expected amid tough markets

HONG KONG, Sept 6 Reuters The merger of two statebacked brokerages in China to create a sector leader with 230 billion in assets is part of Beijing39;s drive to consolidate the 1.7trillion industry amid challenging markets, and the move is set to gather pace, analysts said.

Shanghaibased Guotai Junan Securities is set to acquire its crosstown rival Haitong Securities via a share swap, the two companies said late on Thursday. The deal is subject to regulatory and shareholder approval.

The combined entity, with 1.6 trillion yuan 226 billion in total assets, will overtake Citic Securities as China39;s largest brokerage. Trading in shares of Guotai Junan and Haitong was suspended on Friday.

Both Haitong and Guotai Junan are controlled by companies running state assets for the Shanghai government.

Under the deal, Guotai Junan plans to issue new shares to investors in Haitong39;s mainland China and Hong Kong listed entities. Guotai Junan will also issue new shares in the onshore market to raise funds for the deal, exchange filings showed.

This marks the start of an industrywide consolidation that will see more mergers between major brokerages, said Huang Yan, fund manager of Shanghai QiuYang Capital Co, referring to the Guotai…