The Development of Direct Investment of Securities Companies

As early as the 1990s, brokers have entered the field of industrial investment in various ways. The most typical example is that Southern Securities once held most of the land in a county in Hainan Province. However, due to a large number of non-performing assets formed by securities firms' investment, they have been cleaned up and rectified by relevant departments, and the investment direction of securities companies has been strictly restricted. Around 2000, some brokers such as Dapeng Securities had set up venture capital companies, but the GEM was not established at that time, which made these brokers lose their blood and suffered heavy losses. As much as 200 1, the CSRC once again ordered securities companies to ban venture capital. The securities companies that died in China in the past largely died because they could not get back their long-term investments.

Previously, brokers suffered huge losses due to direct investment, mainly through misappropriation of customer deposits and other illegal ways to fill the deficit after the investment problems, so that the losses became bigger and bigger. Mechanisms such as third-party depository can form an effective firewall to control most risks.

In addition, the direct investment of brokers is mainly aimed at pre-listing financing projects, with high term and relatively low risk. At present, brokers are trying direct equity investment business, with low opportunity cost and high expected return. Moreover, unlike the previous industrial investment, the direct investment of securities firms is basically equity investment, which is no longer the original "hold and long-term" operation mode. Moreover, the acceleration of the listing of small and medium-sized enterprises makes the investment recovery cycle more predictable.

Simply put, it is a low-risk and high-yield investment.