On the evening of March 27, 2026, China Merchants Securities Co., Ltd. (CMSC) released its 2025 annual report. The company reported annual revenue of 24.972 billion yuan, an increase of 19.5%, and net profit attributable to shareholders of the parent company of 12.35 billion yuan, up 18.9%. Both revenue and profit reached record highs.
The market responded positively to the results. The company's stock price had already risen on the day of the report's release, accumulating a gain of 3.89% over four trading sessions.
However, compared to other leading firms, this performance was significantly lagging. By April 3, a total of 25 listed securities companies had disclosed their 2025 annual reports, with 9 reporting revenue exceeding 20 billion yuan. Excluding the merged entity of Guotai Junan and Haitong Securities, the remaining 8 leading securities firms collectively achieved revenue of 275.5 billion yuan, a year-on-year increase of 7.61%, and net profit attributable to parent company shareholders of 113.8 billion yuan, surging 33.5% year-on-year.
In contrast, while CMSC's revenue growth was relatively strong, its net profit growth was far weaker than its peers, indicating a clear trend of increasing revenue without a corresponding increase in profitability.
Over the past five years, the Matthew effect in the securities industry has intensified significantly. Although CMSC has maintained a stable revenue ranking, firmly holding the ninth position in the industry, its market share has declined instead of growing. According to data from Wind and the Securities Association of China, CMSC's revenue market share fell from 5.86% to 4.61% between 2021 and 2025, while its net profit market share dropped from 6.10% to 5.61%.
The company's stock price has also trended lower. As of the close on April 3, the share price stood at 15.55 yuan per share, corresponding to a market capitalization of 130.2 billion yuan. This represents a decline of 37% from the nearly five-year high of 24.73 yuan, wiping out approximately 77 billion yuan in market value.
From a business structure perspective, brokerage and proprietary trading have consistently been the core components of CMSC's profits. A lack of flexibility in the proprietary trading business has been the primary reason for the company falling behind in the current market recovery.
Between 2021 and 2025, the proportion of revenue contributed by brokerage and proprietary trading at CMSC was 59%, 60%, 75%, and 75%, respectively. (Note: Brokerage business revenue = net brokerage commission income; Proprietary trading revenue = net investment income - investment income from associates and joint ventures + net fair value change gains.)
Over the past five years, CMSC's brokerage business has closely followed industry trends, with annual growth rates roughly in line with the industry average.
However, its proprietary trading business has shown significant underperformance. In 2021, CMSC's investment return rate was 3.07%, ranking 28th among 42 listed securities firms. From 2022 to 2023, the company's investment return rate adjusted downward to a range of 1.65% to 1.85%, with its ranking staying between 20th and 30th. From 2024 to 2025, as the capital market recovered, the company's investment return rate rebounded to a range of 2.55% to 2.60%, but its ranking fell to beyond 30th place. (Note: Investment return rate = proprietary trading income / financial investments.)
It is noteworthy that in 2025, despite a significant rebound in the A-share market, with the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index rising by 18.41%, 29.87%, and 49.57% respectively, securities firms generally saw strong growth in proprietary trading. According to Wind data, the 25 listed securities firms that had published annual reports collectively achieved investment income of 184.9 billion yuan, a year-on-year increase of 32.94%. In contrast, CMSC reported investment income of 9.785 billion yuan for the year, with a meager growth rate of only 2.70%, significantly weaker than the industry average.
The relative rigidity of returns from CMSC's proprietary trading business likely stems from its relatively conservative and cautious investment strategy.
Examining the structure of CMSC's financial assets held for trading, the total size was approximately 270 billion yuan as of the end of 2025. Bonds accounted for about 166 billion yuan, representing roughly 60% of the portfolio, while equity investments and funds collectively accounted for about 82 billion yuan, or approximately 30%. This equity and fund allocation ratio is among the lowest in the industry.
By comparison, the combined allocation to equities and funds at CITIC Securities was 34%, while at China International Capital Corporation Limited (CICC) it was 47%.
This conservative asset allocation has resulted in CMSC's investment return rate lagging far behind other leading securities firms. Among the top 10 securities firms by revenue, CMSC's investment return rate has perennially ranked second or third from the bottom, with its long-term performance only superior to GF Securities.
It is precisely CMSC's long-standing adherence to a defensive strategy in managing its proprietary trading book, maintaining a bond-heavy and structurally conservative portfolio, that caused it to achieve only a modest performance improvement while other brokers soared during the strong market conditions of 2025.
CMSC's cautious approach is also reflected in its international business, where its overseas market expansion has been slow, and its pace of international transformation lags behind peers.
In 2022, CMSC's overseas business incurred losses. Although the overseas business recovered somewhat thereafter, growth has slowed year by year. In 2025, overseas revenue increased by only 6.09% year-on-year to 1.161 billion yuan, still below the 2021 level of 1.441 billion yuan.
From a proportional standpoint, the contribution of overseas revenue to the company's total has consistently hovered in the low single digits, reaching only 4.65% in 2025. This figure ranks second from the bottom among the top 10 securities firms, only higher than Shenwan Hongyuan.
It is undeniable that CMSC's prudent strategy has solidified a stable business foundation. Over the past five years, the rankings of CMSC's other business divisions have remained steady. According to Wind SECI database statistics, its brokerage business consistently held the fourth position, except in 2024 when it ranked sixth. From 2022 to 2024, its investment banking business ranked around twelfth in the industry, before returning to seventh in 2025. In asset management, the company's ranking has steadily improved from sixteenth to tenth in recent years.
However, CMSC's hesitation in the proprietary trading and international business segments may now represent its most significant weaknesses for future development. Without breakthroughs in these two areas, CMSC risks continuing to fall behind in the future competition within the securities industry.
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