From a full-year perspective, securities firms are poised to maintain rapid profit and dividend growth, with investment banking, proprietary trading, overseas expansion, and wealth management expected to sustain momentum through the third quarter. Consensus estimates suggest third-quarter earnings may beat expectations, supporting an outlook for valuation re-rating among leading brokers driven by a rising return-on-equity trajectory and improved earnings sustainability.
For listed insurers, annual profits and dividends are expected to grow steadily, and we favor high-dividend-yield targets within the current dividend style. Within the sector, we highlight Jiangsu Financial Leasing for its robust and consistent earnings growth alongside an attractive dividend yield.
Securities: August Equity Fund Assets Rose 3.3% Month-on-Month; Leading Brokers Poised for Re-rating
Average daily equity-fund turnover reached RMB 2.26 trillion this week, down 2.8% week-on-week, bringing the year-to-date daily average to RMB 3.12 trillion, up 63.6% year-on-year. According to AMAC data for August, non-money-market public funds and equity-oriented funds (excluding money market and bond funds) stood at RMB 23.3 trillion and RMB 11.4 trillion respectively, up 1.7% and 3.3% month-on-month. Fund shares totaled RMB 17.6 trillion and RMB 7.9 trillion, down 0.8% and 1.2% month-on-month, while net asset values rose 2.5% and 4.6% month-on-month, respectively. The NAV recovery in August drove modest net redemptions across non-money-market and equity funds. Equity ETF assets fell 0.6% month-on-month to RMB 2.7 trillion, with shares down 2.4% to RMB 2.3 trillion. Excluding ETFs, active equity funds saw assets rise 4.6% month-on-month to RMB 8.6 trillion, while shares contracted 0.7% to 5.6 billion units, reflecting slight net redemptions. Bond funds, FOFs, and QDII products posted month-on-month asset changes of +0.1%, -1.0%, and +1.4%, with shares down 0.6%, 2.4%, and 0.6%, and NAVs up 0.7%, 1.4%, and 1.4%, respectively—all witnessing net redemptions amid NAV recovery.
Valuations and positioning in the brokerage sector remain favorable. With robust first-half profit and dividend growth, combined with three key narratives—business transformation toward overseas and mass-affluent wealth management, increasing market share among top-tier firms, and a slow-bull market environment—leading brokers are expected to see improved earnings sustainability and higher ROE. We see continued valuation re-rating and outperformance potential for top-tier brokerages.
Insurance: Medical Insurance Model Clauses Open for Comment; Insurance Firms' Dividend Advantage Under Style-Driven Market
On September 16, the China Insurance Association issued three draft model clauses for public consultation covering short-term medical insurance, long-term medical insurance, and Huiminbao (city-level supplemental medical insurance). These model clauses serve as industry-standard reference texts for standardizing policy contract content. In the drafting notes, the association indicated that regarding specific drug cost coverage, the model clauses require insurers' agreed-upon specific drug lists to incorporate the association's published commercial health insurance drug coverage list. Once finalized, this drug list would become the industry standard for determining drug coverage across various medical insurance products through alignment with the model clauses. We believe that standardized and expanded coverage of drugs and related protection services will support high-quality development of the health insurance sector.
Insurance sector valuations and institutional positioning remain at historical lows. The logic of stabilizing interest rate spreads persists, supported by long-end rates fluctuating at the bottom and continued declines in liability costs. Meanwhile, premium growth is likely to be sustained by deposit migration trends. The industry's long-term fundamentals support valuation recovery. While third-quarter investment performance, liability-side metrics, and COR may show some weakening quarter-on-quarter, market style becomes the primary driver. We recommend high-dividend-yield names including China Pacific Insurance, Ping An Insurance, and PICC P&C.
Recommended Portfolio
Our recommended and beneficiary holdings include: GF Securities, Huatai Securities, China Pacific Insurance, Jiangsu Financial Leasing, and PICC P&C; along with CITIC Securities, CICC (H shares), Ping An Insurance, Hithink RoyalFlush, Guotai Haitong, Hong Kong Exchanges and Clearing, and Caitong Securities.
Risk Factors
Capital market volatility may introduce uncertainty in investment returns; insurance liability-side performance may fall short of expectations.
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