Following the previous session's notable gains, the brokerage sector extended its upward momentum on September 4, with the benchmark index tracked by Hwabao Securities ETF (512000) climbing more than 1% in intraday trading. Xiangcai Securities surged over 7%, while Huaan Securities, BOC International, Tianfeng Securities, and GF Securities also posted leading gains.

Earnings performance appears to be the primary catalyst behind the rally. According to industry data, the 43 A-share listed brokerages collectively generated revenue of RMB 364.71 billion in the first half, up 45.87% year-on-year, while their combined net profit attributable to shareholders reached RMB 155.37 billion, a 49.01% increase over the same period last year. Industry momentum continues to accelerate.

Meanwhile, the sector's valuation remains at historically depressed levels. The price-to-book ratio of the CSI All-Share Securities Companies Index stands at just 1.28 times, positioning it at the 17.35th percentile over the past decade. This divergence from robust earnings growth leaves significant room for valuation re-rating.

Feng Chencheng, the fund manager overseeing Hwabao Securities ETF (512000), points to three compelling reasons for choosing brokerage stocks at the current juncture. First, trading volumes have contracted to cyclical lows, suggesting a market characterized by existing capital rotation, where smaller-cap style rotation sustains market activity and property policy improvements bolster risk appetite. A balanced allocation approach has become the prevailing market consensus, and the sector's characteristics of low crowding, low valuation, and strong interim earnings growth align perfectly with current fund preferences.

Second, leading brokerages recorded return-on-equity ratios of 6% to 8% in the first half, with full-year projections of 10% to 12%. At the current 1.28x PB valuation, allocating at these depressed levels offers historically favorable odds.

Third, the sector's robust interim results solidify the foundation for valuation recovery. Traditional businesses are showing strength across multiple fronts, while overseas operations and technology-driven segments contribute incremental growth, underscoring the sector's earnings resilience. With the continued rise in direct financing ratios, the "tech-content" thesis remains intact, and hard-technology IPOs in the third quarter are set to enhance earnings visibility.

Hwabao Securities ETF (512000) passively tracks the CSI All-Share Securities Companies Index, offering investors a single-ticket exposure to 49 listed brokerage stocks. It serves as an efficient investment vehicle that concentrates exposure in leading brokerages while also providing access to smaller and mid-sized securities firms. Investors outside the exchange can participate through feeder funds (Class A: 006098, Class C: 007531).

Data sources include exchanges in Shanghai and Shenzhen, Wind information, and other providers. As of the latest available data, the index weightings for Xiangcai Securities, Huaan Securities, BOC International, Tianfeng Securities, and GF Securities within the benchmark index were 0.58%, 1.33%, 1.06%, 1.44%, and 3.42%, respectively.

Fee Structure and Risk Disclosure: For the ETF, authorized participants may charge commissions of up to 0.5% when subscribing or redeeming fund shares, while on-exchange trading fees are subject to the actual charges imposed by securities firms, with no sales service fees applied. For the feeder funds, Class A units carry a subscription fee (charged upfront) of RMB 1,000 per transaction for subscriptions of RMB 2 million or above, 0.6% for amounts between RMB 1 million and RMB 2 million, and 1% for amounts below RMB 1 million. The redemption fee for Class A units is 1.5% for holdings of fewer than 7 days, 0.5% for holdings between 7 and 180 days, 0.25% for holdings between 180 days and 1 year, and zero for holdings of 1 year or more, with no sales service fee charged. Class C units charge no subscription fee, a redemption fee of 1.5% for holdings of fewer than 7 days, zero for holdings of 7 days or more, and a sales service fee of 0.4%.

The Hwabao Securities ETF (512000) and its feeder funds passively track the CSI All-Share Securities Companies Index, with a base date of June 29, 2007, and launched on July 15, 2013. The index recorded annual returns of -4.95%, -27.37%, 3.04%, 27.26%, and 2.54% from 2021 to 2025, with annual volatility of 24.46%, 23.47%, 21.17%, 36.95%, and 20.53% over the same period. Index constituent composition adjusts periodically in accordance with the index methodology, and backtested historical performance does not indicate future index behavior. This product is issued and managed by Hwabao Fund, and distribution institutions are not responsible for the product's investment, redemption, or risk management obligations. Investors should carefully read the fund contract, prospectus, and fund product summary before investing, understand the fund's risk-return profile, and select products aligned with their own risk tolerance. The fund manager has assessed the securities ETF's risk rating as R3-medium risk, suitable for investors with a suitability rating of C3 or above. Performance of other funds managed by the same fund manager does not constitute a guarantee of this fund's performance. Past performance is not indicative of future results. Investing involves risk, and caution is advised. Sales institutions evaluate the fund's risk in accordance with applicable regulations, and investors should monitor the suitability opinions issued by the fund manager. Risk assessments by various sales institutions may not necessarily align, and the product risk ratings assigned by fund distributors shall not be lower than those established by the fund manager. Differences may exist between the fund's stated risk-return characteristics in the contract and its risk rating due to differing considerations. Investors should understand the fund's risk-return profile, consider their investment objectives, horizon, experience, and risk capacity when selecting fund products, and bear the associated risks themselves. Registration of this fund with the China Securities Regulatory Commission does not constitute a substantive judgment or guarantee of the fund's investment value, market prospects, or returns. Investing involves risk; invest with caution.