The A-share market has recently seen sustained high trading activity. As core intermediaries in the capital market, securities firms stand to benefit directly from this robust market environment. Concurrently, policy-driven reform dividends continue to be released, and a wave of industry mergers and acquisitions is reshaping the competitive landscape of the brokerage sector at an accelerated pace. Against this backdrop, can the brokerage sector leverage these tailwinds for a strong performance?
Multiple positive factors are converging to enhance the sector's upward momentum. Currently, policy catalysts, solid earnings support, and an improving competitive structure are creating a favorable environment for brokerages.
Firstly, the introduction of new derivatives regulations highlights the advantages of leading firms. On May 15, 2026, the China Securities Regulatory Commission (CSRC) released the "Measures for the Supervision of Derivatives Trading (for Trial Implementation)." Institutional analysis suggests that, in the medium to long term, derivatives business remains a crucial tool for brokerages to serve institutional clients, meet risk management needs, and enhance their capital intermediation capabilities. The policy raises entry barriers and ongoing risk control requirements for operating institutions. It is anticipated that top-tier brokerages, with their strong capital bases, established institutional client networks, and comprehensive trading capabilities, are likely to strengthen their competitive edge during this industry standardization process.
Secondly, active market trading provides a solid foundation for earnings growth. Increased market activity is expected to sustain positive earnings expectations for brokerages. Research indicates that the average daily stock and fund trading volume on the A-share market from January to April 2026 reached 3,044.1 billion yuan, a year-on-year increase of 82%. As of May 15, the average daily trading volume for May further rose to 3,806.7 billion yuan. Meanwhile, as of May 20, the outstanding balance of margin trading and securities lending in the A-share market stood at 2,904.9 billion yuan, with the financing balance at 2,883.6 billion yuan. Both figures have reached historical highs since April 2010, with a cumulative increase of over 360 billion yuan for the year, representing a growth of more than 14% compared to the end of last year, indicating strong participation from leveraged funds. The margin financing business has contributed significantly to brokerages' profits. In the first quarter of this year, listed securities firms reported net interest income of 14.7 billion yuan, a substantial year-on-year increase of 91.8%.
Thirdly, major mergers and acquisitions are accelerating industry consolidation. On the evening of May 18, a leading securities firm disclosed a draft integration and restructuring plan, proposing to absorb two peer institutions through a share swap, with the total transaction value reaching 113.9 billion yuan. This significant consolidation within the state-owned system is expected to create another securities firm with assets approaching the trillion-yuan level. Analysis suggests that resource integration within the industry may become another important way for brokerages to rapidly scale up and enhance their comprehensive capabilities. Large brokerages can further address their weaknesses and consolidate their strengths through M&A, while medium and small-sized firms may achieve leapfrog development and rapid growth through external acquisitions, realizing scale effects and business synergies.
Supported by these multiple tailwinds, the brokerage sector currently presents an attractive long-term investment opportunity based on valuation. In terms of performance, listed securities firms collectively achieved adjusted net profit attributable to parent company shareholders of 59.5 billion yuan in the first quarter of 2026, a year-on-year increase of 39.9%. Adjusted operating revenue was 151.2 billion yuan, up 31.5% year-on-year. The industry's adjusted return on equity (ROE) rose to 2.06%, an increase of 0.46 percentage points compared to the same period last year.
Simultaneously, the sector's valuation remains at historically low levels. As of May 20, the price-to-earnings ratio and price-to-book ratio of the CSI All Share Securities Companies Index (399975.SZ) were at the 1.90% and 11.14% percentiles, respectively, over the past decade. The combination of improving fundamentals and low valuation provides ample room for a potential valuation re-rating.
Some institutions further analyze that, characterized by "high ROE and low PB," the brokerage sector could serve as a balanced allocation choice for funds in a volatile market environment. As the strong first-quarter earnings of the brokerage industry materialize, policy catalysts gradually take effect (such as ChiNext reform), and factors suppressing capital flows subside, investment opportunities in listed securities firms warrant attention.
Investors interested in the sector may consider related exchange-traded funds (ETFs), such as Yinhua CSI All Share Securities Companies ETF (159842) and its feeder funds (Class A: 025193; Class C: 025194). This ETF tracks the CSI All Share Securities Companies Index (399975.SZ), covering 49 brokerage stocks, and offers advantages such as high liquidity and trading efficiency. Furthermore, this ETF (159842) currently features one of the lowest management and custody fee rates among similar products (management fee: 0.15% per annum; custody fee: 0.05% per annum), potentially helping investors capture opportunities arising from the convergence of policy reforms and market upcycles.
Risk Disclosure: Investors should carefully review the fund's prospectus and relevant legal documents for detailed fee structures and risk factors before investing. The fee information provided is based on data as of the specified dates and is subject to change.