China Merchants Securities Co.,Ltd. has released a research report indicating that first-half 2026 results across the sector have fully validated the core trends of tech investment, global expansion, and wealth management transformation. As we move into the third quarter of 2026, once the investment gains from marquee projects are fully realized, the progress achieved by various brokerages in international development and wealth management transformation will become even more apparent. With regulators firmly maintaining stable market operations and a relatively balanced supply-demand dynamic for capital, the resilience of the equity market remains intact. The concentration of tech sector holdings has declined as market capital disperses, signaling that the time for balanced allocation across tech sectors has arrived. As a sector that delivered exceptional earnings in this cycle yet saw no corresponding market performance, brokerages deserve a valuation re-rating. Key viewpoints from China Merchants Securities Co.,Ltd. are as follows.
Equity markets show sharp K-shaped divergence while bonds remain relatively favorable
On the equity front, tech sectors buoyed by AI narratives and corresponding capital expenditures have performed strongly, with the ChiNext Index and STAR 50 Index surging 35.6% and 64.3% respectively in H1 2026. In contrast, the Shanghai Composite Index and CSI 300, with their more balanced sector distribution, posted more modest gains of 3.2% and 7.5% respectively during the same period. On the fixed income side, amid weak domestic demand in the macroeconomic environment, bond yields declined rapidly before entering a narrow trading range, with the CSI Aggregate Bond Index rising 2.2% cumulatively, significantly outperforming its 1.1% gain in H1. Market trading activity has remained robust, with average daily equity and fund turnover reaching RMB 3.2 trillion in H1 2026, up 101% year-on-year, while average daily margin trading volume hit RMB 271 billion, up 115% year-on-year. Market prosperity coupled with the release of tech investment flexibility has driven rapid revenue and net profit growth, achieving the best first-half results in recent years.
In H1 2026, the 42 listed brokerages generated RMB 363.8 billion in operating revenue, up 46% year-on-year, with non-GAAP net profit reaching RMB 154 billion, up 63%. On the revenue side, investment gains once again contributed the most to growth, supported by robust trading activity that solidified the brokerage base, alongside substantial growth in net interest income. Specifically, investment, brokerage, net interest income, asset management, other, and investment banking revenues for the 42 listed brokerages stood at RMB 162.4 billion, RMB 97.8 billion, RMB 30.1 billion, RMB 27.5 billion, RMB 20.5 billion, and RMB 19.4 billion respectively, contributing +45.9%, +30.1%, +9.1%, +4.7%, +6.9%, and +3.4% to year-on-year growth. On the cost side, the rising share of investment income diluted management expense ratios, with the H1 2026 management expense ratio for the 42 listed brokerages falling to 42.9%, down 8.1 percentage points year-on-year. In terms of operational performance, industry ROE improved significantly, with the average ROE for the 42 listed brokerages reaching 9.34% in H1 2026, up 2.43 percentage points from 2025. On one hand, elevated operational leverage and stable capital utilization efficiency have been key factors behind the strong ROE performance of leading brokerages such as China Merchants Securities Co.,Ltd., CITIC Securities, and others. On the other hand, some brokerages have benefited from tech equity investment gains, with high ROA growth supporting ROE, as seen in cases like Changjiang Securities and Huaan Securities.
Brokerage flexibility fully unleashed as top-tier firms deepen wealth management transformation
In H1 2026, brokerage revenue for the 42 listed brokerages reached RMB 97.8 billion, up 54% year-on-year. Structurally, agency distribution of financial products generated RMB 10.1 billion, up 86% year-on-year, significantly outpacing trading unit seat leasing (up 75%) and securities agency trading revenue (up 50%). Distribution accounted for 10.4% of net brokerage revenue, up 1.8 percentage points year-on-year. Across the industry, wealth management transformation continues to advance steadily, while the faster growth of seat leasing revenue compared to agency trading revenue reflects the institutionalization of the market in the first half. Looking deeper at wealth management, private equity distribution volumes have surged, providing high flexibility to distribution income. Meanwhile, through market cycles, buy-side advisory businesses at leading firms like China Merchants Securities Co.,Ltd. and CITIC Securities have undergone multiple rounds of market and client validation, continuously iterating and evolving to become a key growth engine for brokerage revenue.
Investment banking recovery driven by upward cycle with notable capital-heavy trends
In H1 2026, investment banking revenue for the 42 listed brokerages totaled RMB 19.4 billion, up 25% year-on-year. Amid reforms to the STAR Market and ChiNext and intense competition in the Hong Kong primary market, investment banking revenue determinants have shifted back to the A-share market, with CITIC Securities, China Merchants Securities Co.,Ltd., and Guotai Haitong securing the top three positions. The "three-investment linkage" has materialized on balance sheets, with H1 2026 contributions from alternative investment and private equity subsidiaries to group net profits attributable to parent for Huaan Securities, Guotai Haitong, and Changjiang Securities at 52.7%, 36.1%, and 35.7% respectively. However, leverage effects diverge, with CITIC Securities and China Merchants Securities Co.,Ltd., leaders in investment banking, seeing alternative and private equity subsidiary net profits contribute only 9.0% and 3.7% respectively, due to differences in lock-up expiry exit strategies, liquidity discounts, and core business scale. Going forward, tech investment gains will hinge on two key variables: the sustainability of tech IPO listings and the intensity of secondary market trading activity. Additionally, if market volatility intensifies and lock-up expiry periods approach, attention must be paid to the potential negative impact of exit pacing on brokerages' reported earnings under counter-cyclical policy adjustments.
Asset management remains steady with top-tier concentration further pronounced
In H1 2026, asset management revenue for the 42 listed brokerages reached RMB 27.5 billion, up 24% year-on-year. The CR5 and CR10 for asset management were 66.6% and 81.4% respectively, up 4.4 and 3.6 percentage points year-on-year. Industrial Securities, Great Wall Securities, GF Securities, and Orient Securities lead in "fund content ratio," with their respective holdings in public funds contributing 34%, 34%, 16%, and 15% to their net profits attributable to parent companies in H1 2026. At present, asset management businesses have largely digested the policy impact of new asset management regulations, and competitive dimensions are converging on three fronts: building performance foundations through active management capabilities, driving product innovation through institutional business line collaboration, and strengthening channel pricing power and client stickiness through wealth management empowerment. For public fund operations, beyond rebuilding investor confidence through stable upward net value curves and leveraging brand effects, focusing on product fee tiering trends and adjusting organizational structures may represent the optimal path to mitigate the impact of fee reductions and profit concessions.
Tech investment and cross-border operations unleash flexibility
In H1 2026, investment income for the 42 listed brokerages totaled RMB 162.4 billion, up 48% year-on-year, with annualized investment return reaching 6.19%, up 1.25 percentage points from 2025. For leading brokerages, growth in financial assets primarily stems from client-demand business expansion (OTC equity derivatives) and increases in tech equity valuations. For mid-to-small-sized brokerages, beyond tech equity valuation growth, financial asset increases come from trading bonds and high-dividend assets, with some companies choosing to realize gains from OCI bond floating profits. Focusing on top-tier brokerages, the growth in OTC equity derivatives mainly originates from cross-border business. The consolidated financial assets held for trading at leading brokerages show similar growth rates to those at subsidiary level (derived from reconciling consolidated and parent company statements), and the latter's growth aligns with their TPL stock growth, providing financial corroboration for this assessment. However, looking back from September, it is essential to emphasize the cyclical nature of derivatives business and the stepwise characteristics of its income. Regarding concentration, H1 2026 investment income CR5 and CR10 stood at 51.1% and 73.9% respectively, exceeding industry capital concentration (CR5 at 39.9%, CR10 at 61.2%). When merger-driven concentration dividends are released, competition in capital-intensive businesses will fully pivot to competition in license advantages, client bases, product design, and trading capabilities.
Market prosperity drives scale expansion amid accelerating fee declines
In H1 2026, net interest income for the 42 listed brokerages reached RMB 30.1 billion, up 53% year-on-year. In terms of business scale, as of end-H1 2026, margin financing balances for the 42 listed brokerages stood at RMB 2.5 trillion, up 62% year-on-year and 19% from the beginning of the year. Reverse repurchase financial assets totaled RMB 397.8 billion, up 16% year-on-year and 1% from the start of the year. From a competitive landscape perspective, margin financing concentration continues to rise, with end-H1 2026 CR5 at 37.3%, up 0.5 percentage points from the beginning of the year, as GF Securities overtook China Galaxy in market share to claim fourth place. From a fee perspective, intense market competition has accelerated the decline in margin financing rates. The H1 2026 margin financing rate for the 42 listed brokerages was 4.31%, down 0.75 percentage points from H2 2025, with the decline notably widening compared to the previous half-year period (H2 2025 declined 0.14 percentage points from H1 2025).
Risk warnings: Market volatility intensification, economic recovery falling short of expectations, and policy effects underperforming expectations.
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