The performance of the brokerage sector, often seen as a bellwether for bull markets, remained largely in negative territory during the first half of the year, even within a market characterized by extreme divergence and a general capital shift towards technology themes.

Data from Wind shows the Shenwan secondary securities industry index fell by 7.84% cumulatively in H1 2026. Within the sector, individual stock performances were mixed: eight stocks managed to post positive gains for the half-year, with four including Huaan Securities Co., Ltd. (SSE: 600909)—noted for its "sci-tech innovation characteristics"—rising over 10%. However, approximately 80% of brokerage stocks ended the period lower, with the performance gap between the best and worst performers nearing 100 percentage points.

Nevertheless, a notable rebound has emerged in the brokerage sector since mid-June, with the industry index surging 8% for the month. Looking ahead to the second half of the year, multiple institutions believe there is still room for valuation recovery in the sector, driven by the combined effects of three main themes: sci-tech innovation investment, international business, and wealth management. However, internal divergence within the industry is expected to intensify further.

Widespread Declines in the First Half

The first half of 2026 saw the brokerage sector completely move away from the homogeneous, broad-based gains of the past, with divergence becoming the core theme throughout the period. Stocks were clearly divided into three tiers: strong performers with sci-tech innovation characteristics, leading comprehensive brokerages, and weaker tail-end firms.

Wind data indicates that among the 50 stocks in the Shenwan secondary securities sector, only eight achieved positive returns in H1, meaning over 80% of the stocks closed lower.

Huaan Securities Co., Ltd. (SSE: 600909) was the only stock to gain over 50% in H1, with a cumulative increase of 63.86%, consistently attracting concentrated capital inflows due to its advantages in binding with the semiconductor and hard-tech industries. China Merchants Securities Co., Ltd. (SSE: 600999) and Changjiang Securities Company Limited (SZSE: 000783) followed closely, with H1 gains of 26.80% and 24.48%, respectively. Additionally, Caida Securities Co., Ltd. (SSE: 600906) also rose over 10%, gaining 11.84%.

Discussing the strong performance of brokerages with "sci-tech innovation characteristics," analysis points out that the outstanding performance of Huaan Securities Co., Ltd. (SSE: 600909) and Changjiang Securities Company Limited (SZSE: 000783) is related to their investments in leading memory companies ChangXin Memory Technologies and Yangtze Memory Technologies, respectively. This highlights the importance for brokerages of accompanying the growth of sci-tech innovation companies for their investment performance and valuation. Overall, the quantity and quality of M&A activities and investments in leading sci-tech targets remain the most market-focused fundamental variables in the securities industry currently. Stocks with high certainty of earnings growth are expected to see clearer valuation recovery opportunities.

Other major brokers that also maintained positive gains for the period include China Securities Co., Ltd. (SSE: 601066), GF Securities Co., Ltd. (SZSE: 000776), China International Capital Corporation Limited (SSE: 601995), and CITIC Securities Company Limited (SSE: 600030), with H1 gains ranging between 2.76% and 9.24%, providing stable support for the sector.

In contrast, valuations continued to be cleared for many, with half of the stocks experiencing persistent declines throughout the year. For instance, Guosheng Securities Co., Ltd. (SZSE: 002670) fell 34.68% in H1, with a single-quarter decline of 22.81% in Q2, making it the worst performer in the sector. This results in a performance gap of 98.54% between the best and worst performers in H1. Capital Securities Corporation Limited (SSE: 601136), Guosen Securities Co., Ltd. (SZSE: 002736), and China Galaxy Securities Co., Ltd. (SSE: 601881) all declined over 20%.

Structural Rebound Since June

It is worth noting that, despite not having "recovered lost ground" in H1, the valuation recovery trend initiated in mid-June has made the brokerage sector one of the important areas of focus for institutions in H2.

On June 22, the brokerage sector experienced significant volatility, with the Shenwan secondary securities industry index surging over 7% in a single day, triggering a wave of limit-up gains for individual stocks. In subsequent trading sessions, capital continued to flow in, with stocks like Changjiang Securities Company Limited (SZSE: 000783) and Huaan Securities Co., Ltd. (SSE: 600909) posting consecutive limit-up gains. As of the close on June 30, the monthly gain for the Shenwan secondary securities industry index in June reached 8.28%.

Looking at specific stocks, Huaan Securities Co., Ltd. (SSE: 600909) gained over 54% in June. Changjiang Securities Company Limited (SZSE: 000783), China Merchants Securities Co., Ltd. (SSE: 600999), GF Securities Co., Ltd. (SZSE: 000776), and Guotai Junan Securities Co., Ltd. (SSE: 601211) rose over 20%. China Securities Co., Ltd. (SSE: 601066), Huatai Securities Co., Ltd. (SSE: 601688), and Caida Securities Co., Ltd. (SSE: 600906) gained over 10%. Furthermore, in the first two trading days of July, stocks that saw significant pullbacks in H1, such as Guosheng Securities Co., Ltd. (SZSE: 002670) and Tianfeng Securities Co., Ltd. (SSE: 601162), also experienced notable valuation recovery.

Analysis suggests that since mid-June, the brokerage sector has shifted significantly from its previous weak performance, with clear signs of capital returning and effectively restored confidence. It is expected that the sector may evolve from a phase of catch-up gains towards a pattern of relatively strong, fluctuating recovery, potentially gradually recouping its year-to-date losses as market attention increases. The current price-to-book (P/B) ratio of the brokerage sector still shows a significant gap compared to its ten-year average of 1.52x, with over 60% of stocks within the sector trading below the sector's average valuation, suggesting that subsequent structural activity may remain relatively active.

Other institutions also note that the recent independent surge in the brokerage sector is essentially a mean reversion with relatively strong certainty following two years of valuation mismatch. Valuations have long been at historically extreme lows, while fundamentals have sustained high growth alongside active capital markets. It is estimated that from current valuations to long-term reasonable averages, there remains a 15% to 46% upside for the price-to-earnings (P/E) ratio and a 5% to 36% upside for the P/B ratio.

Sci-Tech Investment as a Key H2 Catalyst

In reality, the misalignment between sector valuation and earnings growth has been a persistent "bottleneck" for the brokerage sector's performance over recent years.

Benefiting from increased capital market activity, expansion of investment banking business, and improvements in proprietary trading investment returns, the profitability of A-share listed brokerages has consistently remained at a high level.

Wind data shows that the aggregate net profit attributable to shareholders of the A-share brokerage sector grew from 176.665 billion yuan in 2024 to 251.433 billion yuan in 2025, a year-on-year increase of 42.32%. Although the growth rate of listed brokers' performance moderated in Q1 2026, it remained at a relatively high level above 20%. Research predicts that brokerages' interim reports are expected to show further growth on a high base, with industry profits in Q2 projected to increase sequentially.

However, in the secondary market, the Shenwan secondary securities index has been on a downward trajectory since hitting a阶段性高点 in November 2024. Despite a brief surge in August 2025, performance remained weak until the end of May 2026. It was not until mid-June 2026 that signs of a new recovery trend began to emerge.

Looking ahead to H2, multiple institutions offer a relatively consistent view: a value re-rating for the brokerage sector is unfolding, driven by the共振 of multiple factors including明显低估 valuations,持续高增 earnings, and the re-pricing of sci-tech innovation attributes. As the半年度业绩预告 period approaches in July, the investment thesis for the brokerage sector is expected to find further confirmation at the earnings level.

Among these factors, sci-tech innovation investment is becoming one of the important catalysts for the brokerage sector's performance in H2. Registration制 rules show that all科创板 IPO projects强制要求 sponsoring brokers'另类子公司 to participate in follow-on investments. The创业板 implements differentiated constraints, requiring保荐机构 to participate in follow-on investments for listings of four types of companies, including unprofitable ones.

Analysis indicates that the high earnings growth of brokerages in H1 was primarily driven by three main themes: sci-tech innovation investment, international business, and大财富 management. Within sci-tech innovation investment, the dual catalysts of an IPO recovery and the sci-tech market trend have ushered in an earnings realization period for primary market businesses like investment banking, direct investment, and另类投资.

Concurrently, industry divergence is likely to intensify further. In this view, leading brokers,凭借 their license and capital advantages, comprehensive "三投联动" corporate service capabilities, and product端 advantages in wealth management, are expected to benefit long-term from opportunities arising from overseas balance sheet expansion amid two-way capital market opening, high returns from investment banking and investment activities during the sci-tech market trend, and the reallocation of居民 assets in a low-interest-rate era.

Other analysis also points out that the long-term divergence in profitability between leading and尾部 brokerages will inevitably drive industry consolidation and resource concentration. In this context, leading large comprehensive brokers should focus on重资本, institutional, and cross-border business tracks. Meanwhile, regional特色中型券商 should deepen their属地 resources, serve regional industrial clusters, or垂直深耕 specific细分赛道 to build specialized "小而专" business capabilities.