The "15th Five-Year Plan" has explicitly called for improving the capital market's function of balancing investment and financing. Industry insiders interpret this reform direction as aiming to establish a healthy cycle of "financing—investment—returns—reinvestment," ensuring that investors genuinely benefit from their participation. Among the most direct and tangible ways for listed companies to reward shareholders is the cancellation of repurchased shares, a practice rapidly gaining traction across the brokerage sector.
Recently, Sinolink Securities announced a shift in the purpose of its 17.3996 million repurchased shares from "maintaining market value and protecting shareholder interests" to "cancellation and reduction of registered capital." This year alone, Guotai Haitong, Zheshang Securities, and Huachuang Yunxin have completed the cancellation of their repurchased shares, while two other brokerages have unveiled plans to cancel all their repurchased shares. Market experts suggest that cancellation-based buybacks directly enhance shareholder equity, representing an upgrade in the logic of shareholder returns—moving from "expectation management" to "tangible delivery."
Planned Cancellation of 150 Million Yuan in Shares
On September 14, the board of Sinolink Securities approved a proposal to alter the purpose of 17.3996 million shares repurchased between June and August 2026, changing them from "maintaining market value and shareholder interests" to "cancellation and reduction of registered capital." The matter still requires approval from the company's shareholders' meeting. Specifically, Sinolink Securities initiated its share repurchase on June 9, 2026, and completed it on August 26, having repurchased 17.3996 million shares, representing 0.4696% of total shares. The highest transaction price was 9 yuan per share, with the lowest at 8.16 yuan, totaling approximately 150 million yuan (excluding transaction fees). The proposed cancellation accounts for 0.4724% of the company's current total share capital. Upon completion, the total share capital will shrink from 3.683 billion shares to 3.666 billion shares.
"Since 2023, Sinolink Securities has executed four rounds of buybacks, spending approximately 510 million yuan, and has cancelled repurchased shares three times," the company stated. It emphasized that cancellation-based buybacks are one of the most direct and substantive ways to reward investors. Once cancelled, repurchased shares permanently exit the total share capital, thereby boosting earnings per share and net assets per share, and genuinely enhancing the value of existing shareholders' stakes.
GF Securities serves as another benchmark in the brokerage sector for cancelling repurchased shares. According to its investor relations activity record from September 15, 2026, the company's shareholders' meeting approved in February 2025 a proposal to change the purpose of its repurchased A-shares to "cancellation and reduction of registered capital," agreeing to cancel all 15.24 million A-shares held in its buyback account and correspondingly reduce share capital.
Data compiled shows that, so far this year, Sinolink Securities, Guotai Haitong, Zheshang Securities, and Huachuang Yunxin have completed the cancellation of repurchased shares, while Zhongtai Securities and Hongta Securities plan to fully cancel their repurchased shares for capital reduction. An industry insider, speaking anonymously, noted that share cancellation permanently removes repurchased shares from total equity. With net profit held constant, this directly enhances earnings per share and net assets per share, prudently raising the value of existing shareholders' stakes. This approach holds deeper intrinsic value compared to short-term market value maintenance measures.
Chen Xingwen, Chief Strategy Officer at Heijiao Capital under the Fengde Group, analyzed that Sinolink Securities' adjustment of buyback purposes reflects a positive shift in shareholder return logic among listed companies. The change of 17.3996 million shares from "maintaining market value and shareholder interests" to "cancellation and reduction of registered capital" might seem merely administrative, but it signifies a fundamental upgrade: cancellation means the company spends real money to shrink share capital, thereby boosting net assets per share and earnings per share. This moves shareholder returns from "expectation management" to "tangible delivery," underscoring a maturing market.
Enhancing Investment Returns
Discussing the evolution of brokerage buyback practices, Chen Xingwen further explained that early brokerages often used buybacks for employee stock ownership plans or equity incentives, essentially treating shares as internal governance tools with benefits flowing to company teams. Later, the focus shifted to "maintaining market value" as a defensive measure against short-term market fluctuations. Now, by choosing cancellation and capital reduction, brokerages are converting buybacks into measurable value increments for all shareholders. This evolution clearly answers the core question of "who are brokerages buying back for": the ultimate goal of buybacks should be shareholder returns, not the tool itself. The transition from employee incentives to cancellation reflects a governance philosophy shift from internal motivation to shareholder-centricity, aligning with the "returns-focused" regulatory approach at the micro level.
At the macro level, while the "14th Five-Year Plan" concentrated on bolstering the capital market's financing capacity, the "15th Five-Year Plan" explicitly stresses coordinating investment and financing functions. Reform efforts aim to correct the historical imbalance that favored financing over investment, fostering a virtuous "financing—investment—returns—reinvestment" loop so that investors can genuinely reap benefits.
Chen Xingwen pointed out that brokerages, as gatekeepers and direct beneficiaries of the capital market, should lead by example in enhancing investor returns. They can focus on three fronts: first, offering stable and transparent cash dividends to provide investors with predictable cash flows; second, employing cancellation-based buybacks like Sinolink Securities to raise per-share value, especially conveying confidence during undervalued periods; and third, using professional research and wealth management services to help investors truly acquire and retain earnings. Combining these measures transforms returns from "numbers in announcements" to "gains in accounts."
The aforementioned insider believes brokerages can enhance investor returns via three approaches. First, utilizing cancellation-based buybacks to strengthen shareholder equity—after cancellation, total share capital shrinks, and with unchanged profitability, key metrics like earnings per share, net assets per share, and return on equity are lifted, reflecting genuine shareholder rewards. Second, raising cash dividend levels—maintaining steady payouts and moderately increasing dividend ratios allow investors to share in operational success, complementing buyback efforts. Third, improving operational quality and market value management—continuously refining fundamentals and profitability, perfecting market value management systems, and aligning performance with reasonable valuations.
Judging the Sincerity of Buybacks
How can ordinary investors discern the authenticity of a listed brokerage's buyback intentions from announcements? The insider suggests evaluating three aspects to gauge genuine investment returns. First, check for "true cancellation"—cancelling repurchased shares fundamentally differs from retaining them for incentives or future sales. Cancellation permanently removes shares from total equity, directly boosting earnings per share and net assets per share under unchanged profit conditions, widely interpreted as a purer shareholder return action with the highest value-reward content. Conversely, buybacks nominally aimed at "maintaining market value" but retained for other uses, or even resold at highs, contribute little to existing shareholders.
Second, assess execution progress—sincerity lies in action rather than rhetoric: quality cases typically involve "yesterday's announcement, today's buyback," with timely cancellation completion and progress disclosure. In contrast, merely publishing a buyback notice without substantial purchases or delayed cancellation processes likely indicates "paper sincerity." Third, examine continuity and price alignment—multiple buyback implementations, sustained cancellations, and repurchase price ceilings higher than current market prices demonstrate the company's confidence in its own value. Cancellation-based buybacks conducted against a backdrop of improving performance and low valuations create solid value support.
Investors should not rely solely on announcements to judge buyback value but must continuously track execution progress and fundamental conditions, avoiding conclusions based on a single notice. Chen Xingwen summarized the core of tangible investment returns as three "reals": "real money"—whether dividends and buybacks are paid in actual cash rather than empty promises; "real intent"—whether buybacks aim at short-term market support or long-term commitment, and if purpose changes are sustainable; and "real effects"—whether the company decisively acts in undervalued ranges rather than performing at high levels.
"Judging announcement sincerity requires looking beyond single amounts to the repeatability of actions and alignment with company strategy," Chen Xingwen noted. Sinolink Securities' latest buyback purpose change precisely demonstrates that it places investor protection within a long-term value framework, rather than treating buybacks as a one-off move.