Wind data reveals that as of January 28, over 10 listed brokerages have disclosed their "2025 report cards," collectively exhibiting a rapid growth trend, with many reporting year-on-year net profit attributable to parent company shareholders growth rates exceeding 50%. Analyzing short, medium, and long-term cycles suggests the brokerage industry may be on the cusp of a systemic opportunity.
Short-term catalysts are emerging from improving earnings and low valuations, providing positive support for the sector. The recent flurry of positive earnings previews confirms the industry's robust performance. Institutions project that the 43 listed brokerages will see a 34% year-on-year increase in primary business revenue and a 49% surge in net profit attributable to parent company shareholders for 2025. Furthermore, looking ahead to January 2026, institutional forecasts indicate the overall monthly operating performance of listed brokerages is expected to rebound to near its highest level in the past 12 months. Valuation metrics remain at depressed levels, indicating significant room for recovery. Wind data shows that as of January 28, 2026, the price-to-earnings ratio (TTM) and price-to-book ratio (LF) for securities companies were 16.09 times and 1.46 times, respectively, placing them at the 11.16th and 36.70th percentiles of their historical ranges over the past decade. Analysis suggests a current divergence between the sector's valuation and its fundamental performance, pointing to potential for both short-term recovery and medium-to-long-term upside.
Beyond short-term earnings catalysts, structural optimization of brokerage business models is becoming a core factor underpinning their long-term value from a medium-term perspective. Under a "moderate uptrend" market backdrop, brokerages' diverse business lines stand to benefit. Core profit drivers—including brokerage and wealth management, margin financing, and proprietary investments—are highly correlated with stock market activity. Looking forward, a combination of active trading and a low base effect suggests the earnings improvement trend for listed brokerages is likely to persist. The transformation towards wealth management is deepening. Faced with pressure from declining traditional commission income, the industry is accelerating its shift to wealth management. The buyer-based investment advisory model is now fully implemented, establishing a diversified revenue structure of "commissions + management fees + performance fees," while operational efficiencies enhance service for mass-market clients, significantly strengthening the business model's resilience. Analysts note that this wealth management transition has become a new growth engine for the sector. Brokerages are increasingly competing to bolster their international operations. Since last year, multiple brokerages have disclosed capital injection plans for their Hong Kong subsidiaries. In January 2026 alone, two major brokerages announced substantial capital increases for their international subsidiaries, amounting to up to HKD 9 billion and over HKD 6.1 billion, respectively. These injections are seen as crucial for enhancing the competitiveness and market share of Chinese brokerages globally, with international expansion becoming a key strategy for profit growth. Industry mergers and acquisitions are accelerating. In 2025, industry concentration increased further, with M&A becoming a key path for expansion among leading brokerages. Guided by policy, the benefits of resource integration and business synergies are gradually materializing. Institutional analysis suggests the industry consolidation process will continue to accelerate in 2026, with leading brokerages and high-quality restructuring targets presenting clear medium-to-long term investment value.
From a long-term perspective, support from national strategies and the major trend of household wealth reallocation are set to provide the brokerage industry with broader development space and stronger momentum. Policy and strategic support are key drivers. The "15th Five-Year Plan" emphasizes building a financial powerhouse, positioning capital markets to play a more pivotal role in fostering new productive forces and serving the real economy, thereby opening long-term growth avenues for brokerages. Analysts suggest that if the sector receives further support from financial policies and other long-term catalysts, the upper limit for its valuation could be significantly raised. Brokerages are adapting to meet the financing needs of new productive forces. The current capital market system emphasizes support for technological innovation, with equity financing channels increasingly aligned with this development. Brokerages, guided by functional development, are channeling resources towards key areas like technological innovation, advanced manufacturing, green initiatives, and inclusive finance. For instance, in the first half of last year, the securities industry underwrote over 720 billion yuan in thematic bonds related to these areas, simultaneously boosting high-quality economic development and solidifying the industry's own sustainable foundation. The sector is poised to benefit from the household wealth reallocation trend. A shift in household asset allocation from real estate to financial assets is underway, a trend expected to intensify during the "15th Five-Year Plan" period, leading to a rising proportion of stocks, funds, and other financial assets in household portfolios. This will bring incremental capital into the capital markets, from which brokerages, as core intermediaries, are likely to continuously benefit. For investors bullish on the brokerage sector, considering industry ETFs might be a viable investment approach. For example, the Brokerage ETF (159842) managed by Yinhua Fund tracks the CSI All Share Securities Index, covering large, mid, and small-cap representative companies within the sector. Off-exchange investors can also participate through its feeder fund (Class A: 025193, Class C: 025194).
Comments