China Merges Two Brokerages to Create $230 Billion Giant

China is combining two of its largest state-backed brokerages to create a new behemoth as it seeks to consolidate the $1.7 trillion sector amid a slump in deals.

Guotai Junan Securities Co.will merge with smaller firm Haitong Securities Co. through a share swap, according to statements from both companies on Thursday. The combination of the brokerages, both partly owned by Shanghai’s state assets administrator, will create a new entity with assets of 1.6 trillion yuan ($230 billion), topping Citic Securities Co. as the largest brokerage.

The merger plan is pending approval from the companies’ boards and shareholders, as well ...