Based on the performance of the securities sector in June and July, the securities index has significantly strengthened from its previous relative weakness. The trend of steady recovery and oscillating upward movement in the securities index within the medium to short term cycle is worth anticipating. The securities industry will continue to be in a new upward cycle in 2025, with full-year profit expectations maintaining synchronization with the stable state of capital markets.

**June Securities Sector Performance Review**

Looking back at the securities sector performance in June 2025, the securities index gradually strengthened, with the strengthening trend particularly significant in the latter half of the month, achieving notable gains for the entire month. Specifically, in the first half of June, the securities index followed various equity indices in gradual oscillating upward movement. From mid-month to late mid-month, there was a synchronized significant pullback, temporarily giving back most of the month's gains, consistently failing to effectively stand above the downward gap from April 7, with overall performance still notably weaker than major equity indices.

Entering late June, the securities index rose for three consecutive trading days with expanding daily gains and synchronously increasing daily trading volumes. On June 25, it recorded the year's largest single-day gain and highest single-day trading volume, leading the Shanghai 50, CSI 300 and other large-cap indices as well as CSI 2000 and other small to mid-cap indices, successfully recovering most of the year-to-date losses, with short-term trends significantly strengthening.

Near the end of June, the securities index continued to surge higher and reached new yearly highs, then pulled back slightly for consolidation, ultimately achieving the largest monthly gain since September 2024. Data shows that the CITIC Level-2 Industry Index Securities II rose 8.85% for the entire month of June, outperforming the CSI 300 index (up 2.5%) by 6.35 percentage points. Compared with 30 CITIC Level-1 industry indices, it ranked 6th, up 19 positions from the previous month.

The CITIC Level-2 Industry Index Securities II had a monthly amplitude of 13.27% in June, an increase of 5.26 percentage points from the previous month, with total trading volume of 761.2 billion yuan, an increase of 66.1 percentage points from the previous month.

With the securities sector achieving comprehensive gains, individual stock increases were also generally significant. In June 2025, all 42 listed securities firms with single securities business achieved comprehensive gains, an increase of 16 companies from the previous month. The top 5 gainers were TF Securities (26.41%), Cinda Securities (18.92%), Soochow Securities (13.2%), Guotai Haitong (11.53%), and Everbright Securities (10.51%). The bottom 5 gainers were Founder Securities (3.94%), Hongtai Securities (4.18%), Nanjing Securities (4.26%), Northeast Securities (4.38%), and Guolian Minsheng (4.44%).

In June, 9 listed securities firms outperformed the securities index, a decrease of 10 companies from the previous month, accounting for 21.4%. Looking at different entities, leading securities firms continued their differentiated performance, with individual stocks distributed across various percentiles of sector gains and losses, showing no significant clustering effect when the sector strengthened comprehensively.

**Market Environment Analysis**

**Equity Market Strengthening with Clear Differentiation**

In early June 2025, various equity indices continued modest upward movement and attempted to challenge the rebound highs from mid-May. Entering mid-month, international tensions increased, and international financial markets including commodities like oil experienced renewed volatility. The A-share market weakened in tandem with increased pullback intensity. Near month-end, as international situations gradually clarified, various equity indices rose together with increasing volume and price, continuously strengthening and synchronously creating new rebound highs since early April, with the overall pattern significantly strengthening.

While various equity indices significantly strengthened and created new phased rebound highs in June, short-term strength patterns clearly shifted again. The Shanghai 50 index, representing value-style investing, oscillated and weakened slightly in the upper and middle periods, not synchronizing with other indices' continuous rises. Although it rebounded significantly at month-end, it did not create new highs since early April, with short-term patterns shifting from previous relative strength to relative weakness.

The ChiNext Component Index, representing track-focused growth style, rose continuously in early month with significantly larger gains than value indices, did not create monthly lows during mid-month pullbacks, and had more significant consecutive gains at month-end, creating new highs since early April. Monthly gains led major equity indices and successfully stood above the April 7 downward gap, with short-term patterns significantly strengthening from previous sustained weakness.

**Fixed Income Market Maintaining Oscillation**

In the first half of June, fixed income indices differentiated with modest gains as equity market risk appetite declined again. Near month-end, as equity market risk appetite rapidly improved, the fixed income market faced slight pressure and declined, with the stock-bond "seesaw" phenomenon reappearing.

The 10-year government bond futures index oscillated modestly upward in the upper and middle periods but highs did not reach the rebound highs from mid-April. It gave back some monthly gains in the latter half, with relatively weak overall performance, closing up 0.17% for the month. The China Bond Composite Net Index rose unilaterally from the beginning of the month, breaking through April's rebound high to create new yearly rebound highs, with relatively limited pullback intensity at month-end, with overall patterns significantly strengthening from previous sustained weakness, closing up 0.37% for the month.

**Brokerage Business Sentiment Stabilizing and Recovering**

In June 2025, the market's daily average stock trading volume was 1.336 trillion yuan, up 10% month-over-month and 84.9% year-over-year. Monthly total stock trading volume was 26.72 trillion yuan, up 15.8% month-over-month and 94.6% year-over-year.

Daily average stock trading volume recovered slightly after three consecutive months of decline, returning to the second-lowest level of the year, with total trading volume recovering to mid-year levels. Industry brokerage business sentiment stabilized and recovered after three consecutive months of decline, with monthly trading volume and total volume year-over-year growth rates remaining significant.

Meanwhile, margin financing and securities lending balances achieved modest recovery for the second consecutive month. As of June 30, 2025, total market margin financing and securities lending balance was 1.8505 trillion yuan, up 2.8% month-over-month and 25% year-over-year.

**Investment Banking Business Volume Recovering**

Investment banking business volume recovered to mid-year levels in 2025. In equity financing, June 2025 equity financing scale was 553 billion yuan, including 520 billion yuan raised by Bank of China, Postal Savings Bank, Bank of Communications, and China Construction Bank through strategic investments from the Ministry of Finance and others to supplement core tier-1 capital. Excluding this impact, actual June equity financing scale was 33 billion yuan, up 96.6% month-over-month and 128.2% year-over-year.

In debt financing, industry bond underwriting amount was 1.4899 trillion yuan in June 2025 (by issuance date), up 21.1% month-over-month and 29.9% year-over-year.

**July Market Developments**

**Equity Indices Strengthening with Clear Differentiation**

In the first half of July, equity markets continued the significantly strengthening short-term trend from late June, gradually oscillating upward. Near mid-month, volatility in various equity indices increased somewhat, accumulating momentum for further gains through strong oscillation.

In the second half, with relatively stable international political and economic conditions and steady improvement in international financial markets, various equity indices returned to upward trends after brief strong oscillation. Since late month, driven by the construction commencement of downstream hydropower stations on the Yarlung Tsangpo River, various equity indices experienced relatively smooth consecutive gains, gradually approaching rebound highs from Q4 2024, with overall patterns further strengthening.

**Securities Sector PB Valuation Reaching New Yearly High**

In July 2025, the securities index initially oscillated strongly for consolidation, correcting the three consecutive days of volume-driven gains from late June. Around early to mid-month, the securities index gradually ended short-term adjustment and strengthened again, recording another high-volume positive candlestick, breaking through late June highs to create new yearly highs and refreshing the year's highest trading volume levels.

Since July, the securities sector's average PB gradually recovered from the month's low of 1.4 times to above 1.5 times at month-end, returning to the vicinity of the sector's average valuation of 1.55 times since 2016, creating new yearly valuation highs.

**Industry Outlook and Expectations**

Under the policy tone of "continuously stabilizing and activating capital markets," the overall operating environment for the securities industry in the second half of 2025 will prioritize stability and steady progress. Capital markets will continue to play important roles in consolidating sustained economic recovery and improvement, resisting external shocks, broadening residents' property income channels, and assisting and promoting technological innovation and new quality productive forces development.

The securities industry will continue to be in a new upward cycle in 2025, with full-year profit expectations maintaining synchronization with capital markets' stable state. Currently, the securities index has significantly strengthened from previous relative weakness, but the probability of another rapid recovery similar to late Q3 2024 is relatively low. In the medium to short term, the securities index maintaining steady recovery and oscillating upward trends is worth anticipating, with the sector expected to maintain healthy rotational upward patterns.

Even if capital markets maintain overall range-bound oscillation in the second half, the space for further decline in securities sector average valuations is relatively limited, with 1.3 times average PB likely to become the sector's valuation floor for 2025.