As the A-share annual report season nears its conclusion, 30 listed securities firms have reported impressive results, with combined net profits surging 44% year-on-year. However, this strong operational performance contrasts sharply with the continued weakness of brokerage stocks in the secondary market.
On April 9, the brokerage sector experienced a collective sharp decline. By 14:10, the Wind brokerage index had fallen over 2%. Despite a recent improvement in market sentiment, more than 23 stocks within the sector have declined over 10% year-to-date, with several leading brokerages seeing pullbacks exceeding 15%. Only two stocks have recorded gains so far this year.
Discussions about a potential recovery in brokerage stocks have intensified once again. Recently, over 10 listed securities firms have held intensive 2025 annual performance briefings. Topics such as market value management, mergers and acquisitions, and AI strategies were repeatedly raised by investors. Executives collectively addressed market concerns and clarified valuation doubts, aiming to inject confidence into the market.
In particular, when addressing the divergence between performance and stock prices, brokerage executives demonstrated greater empathy during investor communications. They openly acknowledged sharing investors' frustration with declining share prices and responded with specific measures including market value management, share buybacks, and dividend optimization, striving to stabilize market expectations and boost investor confidence.
Several additional brokerages are scheduled to hold performance briefings soon. Central China Securities held its briefing on April 9, followed by Industrial Securities and Huaan Securities on April 10. China Merchants Securities is set for April 13, while Zhongtai Securities will present on April 16. China Galaxy Securities and Hongta Securities will hold their briefings on April 17 and April 22, respectively.
From a market perspective, the brokerage sector has undergone continuous adjustments since September of last year, with intensified volatility observed since 2026. As geopolitical tensions ease, market risk appetite is gradually recovering. With valuations and institutional positioning at low levels, willingness to allocate funds to brokerage assets may continue to increase.
Sell-side research institutions generally believe that the brokerage sector maintains earnings resilience, and valuation recovery is supported by fundamentals. As geopolitical risks subside and market confidence gradually rebuilds, brokerage targets with strong performance and business flexibility may experience phased recovery.
A significant mismatch exists between fundamentals and valuations. In 2025, listed securities firms generally achieved double-digit growth in revenue and net profit. However, since September 2025, the brokerage sector has become a primary target for sell-offs, with valuations experiencing substantial declines, resulting in a severe disconnect between performance and stock prices.
From a pure earnings perspective, the securities industry has seen a comprehensive profit recovery. As of April 8, 30 listed brokerages or their parent companies had released annual reports or preliminary results, reporting a combined net profit attributable to shareholders of 1.93 trillion yuan, up 44% year-on-year.
The disclosure of 2025 annual reports by listed brokerages is nearly complete, with major institutions having already published theirs. Twenty-two listed securities firms and their parents have yet to report, including Southwest Securities, Zhejiang Securities, Great Wall Securities, Pacific Securities, Guojin Securities, Soochow Securities, and Tianfeng Securities.
Operating data recently released by the Securities Association of China shows that the securities industry achieved revenues of 5.41171 trillion yuan and net profits of 2.19439 trillion yuan in 2025, representing year-on-year increases of 19.95% and 31.20%, respectively. 128 companies were profitable, with a profitability rate of 85.3%.
However, looking at stock performance, the former bull market leaders continue to face downward pressure. Year-to-date, the brokerage index has accumulated a decline of nearly 10%, significantly underperforming the CSI 300 Index and ranking among the worst-performing sectors, leading many investors to doubt the sector's recovery prospects.
Data from Tonghuashun iFinD shows that as of April 7, the performance of 50 A-share listed brokerage stocks has been extremely weak. Only two stocks closed higher, while the other 48 declined. Over 40% of these stocks have fallen more than 20% year-to-date, and nearly 90% have dropped over 10%.
Notably, among the six brokerages with declines exceeding 20% this year, five are industry leaders, indicating a differentiated pattern where larger, more prominent firms have experienced greater weakness.
Against this backdrop, a market consensus has formed: the brokerage sector faces a severe mismatch between fundamentals and valuations. Both sector valuations and institutional holdings are at historically low levels, highlighting the sector's potential allocation value.
Tonghuashun iFinD data indicates that as of April 8, 11 listed brokerages are trading below their net asset value per share (PB < 1), which is typically considered indicative of low valuation.
Overall, as of April 3, 2026, the price-to-book ratio (PB) of the brokerage index stood at 1.24 times, at a low percentile of 13.97% over the past five years. At the end of 2025, public funds' allocation to the brokerage sector was only 0.99%, significantly below the standard allocation level of 3.76%.
The question arises whether the sector-wide rebound in brokerage stocks on April 8 signals an impending recovery. A review of industry research reports shows that sell-side analysts are generally optimistic. They believe that with brokerage sector valuations and institutional positioning at historically low levels for the period, supported by high earnings growth, policy catalysts, and capital inflows, the logic for valuation recovery is clear, presenting strategic allocation opportunities.
Beyond sell-side analysis, the actual trajectory of the brokerage sector is closely tied to the actions and statements of frontline operators. While focusing on core business operations, the ability to stabilize and boost investor confidence is becoming a key test of management's resolve.
During recent 2025 annual performance briefings, investors frequently questioned executives about stock performance, focusing on keywords like valuation decline, market value management, increased dividends, and share buybacks. Responses from executives at firms such as Huatai Securities, Everbright Securities, China Securities, GF Securities, and Founder Securities attracted significant market attention.
In addition to standard responses like "secondary market stock prices are influenced by various factors," "the company will continue to strengthen management to improve performance and shareholder returns," and "the company has formulated a 'Market Value Management Measures'," executives demonstrated greater empathy. They acknowledged sharing investors' feelings regarding the stock price decline and responded with specific measures related to market value management, share repurchases, and dividend optimization, aiming to stabilize expectations and boost confidence.
For instance, when an Everbright Securities investor asked, "The company's performance is improving, but the stock price has been stagnant for years. What concrete measures can actually improve this?" Chairman and Executive Director Zhao Ling responded that the company would enhance communication with market analysts and investors to foster better recognition of the company's investment value, aiming for a stock price that more reasonably reflects the company's worth. Zhao Ling added that the company continues to conduct market value management in compliance with regulations, hoping to further boost market recognition.
Notably, Huatai Securities has declined over 22% year-to-date, ranking first in the industry for losses. During its performance briefing, investors questioned the company's stock trading below NAV and its market value management approach.
Huatai Securities Executive Director and CEO Zhou Yi stated that the company consistently prioritizes market value management, has established relevant systems, and continuously monitors market performance. He mentioned using appropriate tools to communicate long-term investment value and actively working to ensure the stock price reasonably reflects company quality.
Zhou Yi further stated that the company would drive business restructuring and organizational evolution with AI, deeply advance development towards "intelligence, integration, and internationalization," and build core competitiveness that withstands market cycles. He emphasized using solid operational performance to strengthen the value foundation. Additionally, the company will scientifically and prudently evaluate other value operation and realization methods based on its actual situation, focusing on boosting investor confidence and promoting long-term synergistic growth between market capitalization and intrinsic value to create sustainable returns for shareholders.
After East Money Information disclosed the first annual report among listed brokerages on March 19, its stock price fell over 5% the next day, with net outflows of nearly 2 billion yuan in main funds, ranking first in the A-share market. Some investors expressed that despite confidence from the strong financials, expecting a price increase, the stock fell over 10% in the week following the announcement.
"Regarding the recent stock price decline, we share your feelings. We believe that steadily improving operational performance and high-quality development are the core foundation supporting the company's long-term market value," responded Yang Hao, Vice President and Board Secretary of East Money Information. He stated the company would continue focusing on its main business, solidly advancing various operational tasks, strengthening its development foundation, and striving to enhance long-term investment value.
China Securities also expressed understanding of investor concerns, stating, "Since the beginning of the year, affected by multiple factors, the securities sector has faced overall pressure, and our company's stock price has experienced periodic fluctuations. Regarding this, we share your feelings."
China Securities Chairman Liu Cheng added that the company would continue全力以赴ing on operations, closely monitor stock price trends and market performance, seriously research various market value maintenance tools, and conduct market value management work in compliance with laws and regulations, serving the interests of the company and all shareholders.
Furthermore, GF Securities Chairman Lin Chuanhui and Founder Securities Chairman Shi Hua also responded to valuation decline concerns by outlining the company's arrangements regarding operations, market value management, dividend returns, and share repurchases.
Overall, the severe mismatch between brokerage sector performance and valuation is widely recognized by the market. Coupled with easing geopolitical risks and密集ed reassuring statements from executives, the sector-wide rebound observed today releases a positive signal.
Institutional analysts believe the brokerage sector currently offers low valuations, providing a margin of safety and potential for both defense and offense. Looking ahead, as short-term market sentiment in A-shares gradually improves, supported by the ongoing disclosure of annual reports and increasing willingness for capital allocation, a valuation recovery in the brokerage sector is expected to unfold progressively.
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