China Merchants Securities (CMSC) released a research report stating that, overall, regulators are focused on preventing sharp market fluctuations and are firmly committed to maintaining stable market operations. Liquidity supply is ample, while demand remains relatively flexible. The equity market is stable with substantial upside potential, and securities firms' performance is expected to be steady with moderate growth. Currently, both the valuation and positioning of the brokerage sector are at low levels: as of April 3, 2026, the price-to-book (PB) ratio of the brokerage index was 1.24 times, sitting at the 13.97th percentile over the past five years. At the end of 2025, the mutual fund allocation weighting for the brokerage sector was 0.99%, significantly lower than the standard allocation of 3.76%. There is a severe mismatch between the fundamentals and valuations of the brokerage sector, and the firm believes this presents a rare allocation opportunity that should be highly prioritized. It recommends high-performing stocks with low valuations.
Key views from China Merchants Securities are as follows: As of March 31, 2026, 24 out of 42 A-share listed securities firms had disclosed their annual reports, with major brokerages having largely completed disclosures. Equities showed steady upward momentum, while the bond market experienced wide fluctuations. After an overshooting impact from tariff measures imposed by the Trump administration in April, the equity market resumed its upward trend, with the overall market center rising significantly. The average daily stock and fund trading volume for the full year increased by 70% year-on-year to 2.1 trillion yuan. Influenced by "anti-involution" policy narratives and new regulations on sales fee reforms and redemptions, the bond market experienced volatile performance in the second half of the year, resulting in wide fluctuations for the full year.
The primary market showed signs of recovery. In 2025, IPO fundraising amounted to 130.8 billion yuan, a year-on-year increase of 97%. Refinancing fundraising (excluding the定向增发 of the四大行) reached 426.7 billion yuan, up 73% year-on-year. Improved market conditions boosted performance, with active balance sheet expansion in line with the equity market trend. In 2025, the 24 listed securities firms collectively achieved operating revenue of 435.3 billion yuan, a year-on-year increase of 32%, and net profit attributable to shareholders of 172.4 billion yuan, up 46% year-on-year. In the fourth quarter alone, these firms reported combined operating revenue of 104.9 billion yuan, up 6% year-on-year but down 22% quarter-on-quarter. Net profit attributable to shareholders was 36.1 billion yuan, increasing 11% year-on-year but declining 31% quarter-on-quarter. The average return on equity (ROE) was 7.4%, up 1.8 percentage points year-on-year. The operating leverage ratio stood at 4.36 times, maintaining an expansion trend. On the cost side, management expense control persisted throughout the year, with the management expense ratio for the 24 firms at 49%, down 7.2 percentage points year-on-year.
Heavy-asset businesses accounted for nearly half of revenue, while light-asset businesses saw a slight increase. In 2025, the revenue contributions from proprietary trading, brokerage, asset management, credit, investment banking, and other businesses for the 24 listed securities firms were 41.9%, 27.0%, 9.5%, 8.5%, 7.5%, and 5.6%, respectively, with year-on-year changes of -2.0, +2.4, -2.1, +0.9, +0.4, and +0.4 percentage points. Brokerage business demonstrated flexibility, investment banking rebounded from a low base, and asset management performance remained stable.
(1) Brokerage revenue reached 115.8 billion yuan, up 44% year-on-year. Fourth-quarter brokerage revenue was 30.7 billion yuan, down 2% year-on-year and 17% quarter-on-quarter. Influenced by intense competition in fee rates due to heated account openings and active私募量化 trading, the trading commission rate in the second half of 2025 was 0.0153%, down 0.29 basis points quarter-on-quarter. Increased market participation and higher turnover rates drove securities trading agency income up 56% year-on-year to 116.8 billion yuan. Trading seat rental income rose 21% year-on-year to 9.8 billion yuan, although pressure from mutual fund liability-side redemptions persisted, leading to a year-on-year decline in mutual fund trading commission rates. Revenue from financial product distribution was 11.1 billion yuan, up 51% year-on-year, supported by a recovery in equity product issuance, advantages in on-exchange ETF distribution, and a low base effect.
(2) Investment banking revenue was 32.2 billion yuan, up 38% year-on-year. Fourth-quarter investment banking revenue reached 12.5 billion yuan, increasing 57% year-on-year and 62% quarter-on-quarter. With reforms in the "双创" sector gaining momentum, mergers and acquisitions are reshaping industry landscapes, and overseas expansion by Chinese companies is fueling demand for cross-border capital operations, enhancing the Matthew effect in investment banking.
(3) Asset management revenue was 40.5 billion yuan, up 8% year-on-year. Fourth-quarter asset management revenue was 11.5 billion yuan, rising 14% year-on-year and 10% quarter-on-quarter. Benefiting from steady market improvements and clear technology themes, asset managers strong in active equity strategies, such as中泰资管,兴证全球基金,广发基金, and汇添富基金, reported leading year-on-year revenue growth.兴业证券,中泰证券, and东方证券 maintained high "fund company contribution ratios," with their public fund subsidiaries contributing 30%, 19%, and 17%, respectively, to net profit in 2025.
Proprietary trading showed steady growth, while margin lending volume increased but rates declined. (1) Proprietary trading revenue was 179.3 billion yuan, up 26% year-on-year. Fourth-quarter proprietary trading revenue was 31.5 billion yuan, down 15% year-on-year and 48% quarter-on-quarter. The proprietary trading yield was 4.7%, up 0.59 percentage points year-on-year. Strategically, securities firms increased allocations to TPL bonds and realized OCI bond gains in the first half of the year, while boosting equity allocations and slightly increasing OCI bond holdings in the second half, with equity OCI allocations rising throughout the year. For major brokerages, the recovery in client-driven business was a key driver of balance sheet expansion. By the end of 2025,广发证券 and华泰证券 led in the growth of customer margin balances, with increases of 49% and 37% year-on-year, respectively.
(2) In 2025, margin lending and securities lending interest income for the 24 listed securities firms was 67.3 billion yuan, up 21% year-on-year. The outstanding balance of margin lending reached 1.68 trillion yuan, up 47% from the beginning of the year. Intense fee competition persisted, with the overall margin lending rate for the 24 firms in the second half of 2025 at 5.02%, down 0.24 percentage points from 2024 and 0.17 percentage points from the first half of 2025. As credit business expanded, securities firms prudently provisioned for impairment losses to strengthen asset quality. Excluding国泰海通, the 23 listed securities firms collectively set aside 4.4 billion yuan in impairment losses, a 166% year-on-year increase.
The Hong Kong market showed signs of recovery, with strong growth in international business. In 2025, most securities firms' overseas subsidiaries reported net profit growth exceeding 50%, with申万宏源国际,中信建投国际, and东方金控 achieving net profit increases of over 100% year-on-year.中信证券国际 and中金国际 maintained dominant positions, with net profits of 6.4 billion yuan and 4.6 billion yuan, up 74% and 68% year-on-year, respectively. Leading brokerages actively pursued strategic investments to embrace international development.华泰证券,招商证券,广发证券, and中信建投 successively injected capital into their Hong Kong subsidiaries to enhance capital strength.国泰海通 acquired an Indonesian securities firm,华泰证券 established a Japanese subsidiary,广发期货 (Singapore) was registered, and Chinese securities firms continued to improve their global operational networks.
The market is expected to operate steadily, with performance showing moderate growth. Regulators' determination to "prevent sharp market fluctuations" remains firm. On one hand, significant progress has been made in building a stability mechanism with Chinese characteristics, consolidating the market's recovery trend. On the other hand, regulatory measures aim to guide capital expectations with a counter-cyclical approach, preventing market overheating. The firm believes the equity market has a solid foundation with ample upside potential. Supply and demand dynamics for market liquidity are favorable, with individual and institutional account openings remaining high,私募机构 registrations accelerating marginally, and substantial unused quotas under two structural monetary policy tools. Inflows of medium- to long-term capital into the market are anticipated to remain robust, ensuring ample liquidity supply. Potential optimizations in refinancing policies, such as shelf offering explorations, may enhance the flexibility of equity financing demand. Considering regulators' supportive stance toward the secondary market, the firm expects counter-cyclical measures for the primary market will likely be implemented.
Benefiting from strong trading activity early in the year, healthy equity financing节奏, and a recovery in new fund issuance, the securities sector's performance is projected to be steady with moderate growth. Total industry revenue for 2026 is forecasted at 592.5 billion yuan, up 9% year-on-year, with net profit expected to reach 242.9 billion yuan, an increase of 11% year-on-year.
Risks include intensified market volatility, slower-than-expected economic recovery, and policy effects falling short of expectations.
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