Core Viewpoint - The announcement of China International Capital Corporation (CICC) to absorb and merge with China Securities and Dongxing Securities marks a significant event in the A-share brokerage sector, indicating a strategic acceleration towards building a first-class investment bank within the state-owned capital system [2][4][8]. Group 1: Merger Details - CICC plans to conduct a share swap to absorb China Securities and Dongxing Securities, which will result in a combined total asset scale exceeding 1 trillion yuan and a net asset scale of nearly 175 billion yuan, making it the largest brokerage under the "Hui Jin" system [4][5]. - This merger is unprecedented in the brokerage industry, as it combines three firms simultaneously, exceeding market expectations that primarily focused on the merger of individual pairs [4][8]. Group 2: Market Reaction - Following the announcement, the A-share brokerage sector experienced a surge in trading volume, although it faced a decline in stock prices shortly after, reflecting cautious market sentiment [3][5]. - The overall market saw significant declines, with the Shanghai Composite Index dropping 2.45% and the ChiNext Index falling 4.02% on November 21, indicating a broader market pullback affecting the brokerage sector [3]. Group 3: Industry Implications - The merger is seen as a catalyst for further consolidation in the brokerage industry, with expectations that state-owned brokerages will increasingly pursue mergers to enhance competitiveness [6][9]. - Analysts believe that this merger could lead to a more concentrated market structure, potentially pushing smaller brokerages towards mergers or acquisitions as a means of survival and growth [9][10]. - The integration of CICC, China Securities, and Dongxing Securities is expected to enhance CICC's competitive position, potentially elevating its industry ranking from 9th or 10th to 4th or 6th [9][10]. Group 4: Future Outlook - The ongoing trend of mergers and acquisitions in the brokerage sector is anticipated to continue, driven by regulatory support for leading firms to strengthen through consolidation [6][7]. - The long-term outlook remains positive, with expectations that the merger will catalyze a new wave of industry restructuring, enhancing the overall competitive landscape and potentially leading to improved return on equity (ROE) for leading firms [10].