The brokerage sector exhibited strength in early trading on July 15th, with the leading brokerage ETF, Huabao (512000), rising 1.52% intraday, aiming for consecutive gains. CICC (ASX: 03908) led the advance, climbing over 7%, followed by Huaan Securities and Huachuang Yunxin, which gained more than 4%. Cinda Securities, Dongxing Securities, GF Securities, and China Merchants Securities were also among the top performers.
A wave of positive interim forecasts from listed brokerages has widened the gap between strong performance and low valuations, attracting significant capital inflows. Data from the Shanghai Stock Exchange shows that the brokerage ETF Huabao (512000) has seen cumulative net inflows of 2.158 billion yuan over the past 10 days.
Strong Performance Across the Board
So far, over a dozen listed brokerages that have disclosed semi-annual performance forecasts have all reported positive profit growth. Several leading firms have achieved their best-ever profit levels for the same period, while smaller brokerages have demonstrated strong earnings momentum, benefiting from a low base effect and marginal improvements in their operations.
CITIC Securities expects first-half net profit attributable to shareholders of approximately 23.343 billion yuan, a year-on-year increase of 69.59%. Guotai Junan Securities forecasts a net profit between 20.003 billion and 20.511 billion yuan, representing growth of 27% to 30%. China Merchants Securities anticipates net profit in the range of 10 billion to 11 billion yuan, surging 93% to 112%. CICC projects a net profit of 7.708 billion to 8.227 billion yuan, up 78% to 90%. Smaller brokerages like Tianfeng Securities have shown exceptional elasticity, with its highest forecast pointing to a near 700% increase.
Drivers of Growth
Analysis indicates that high trading activity in the A-share market has kept brokerage and credit businesses as stable revenue pillars. Furthermore, the dual-income model of "sponsorship + strategic investment" under the deepened registration-based IPO system has made technology and innovation board-related business a significant, often hidden, profit driver for brokerages. Data shows that brokerages' cumulative strategic investments in STAR Market companies amount to nearly 35 billion yuan, with the held market value approaching 100 billion yuan by the end of the first half.
Market Outlook and Valuation
Institutional analysis suggests that the sector's better-than-expected earnings growth has driven a sustained recovery in brokerage stocks since mid-June, marked by clear capital return and gradual restoration of market confidence. Industry observers believe the current rally is not merely a cyclical rebound but a dual recovery based on both earnings and valuation. Current valuations have not yet fully priced in the sector's profit growth potential, leaving significant room for re-rating, especially for leading brokers with low valuations and strong growth prospects.
Investment Vehicle for the Sector
Given the combination of high growth visibility and low valuations, the brokerage sector's recovery warrants attention. The brokerage ETF (512000) and its feeder funds passively track the CSI All Share Securities Companies Index, providing exposure to 49 listed brokerage stocks in a single transaction. It is an efficient tool for concentrating investments in top-tier brokers while also gaining exposure to smaller firms. The latest fund size of brokerage ETF (512000) exceeds 39.5 billion yuan, with an average daily turnover this year over 1.2 billion yuan, making it one of the largest and most liquid brokerage sector ETFs in the A-share market.
Important Considerations for Investors
Investors are reminded that recent market volatility may be elevated, and short-term price movements are not indicative of future performance. It is crucial to make investment decisions rationally based on individual financial circumstances and risk tolerance, with careful attention to position sizing and risk management.
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