Investment in tech innovation is emerging as a key factor shaping brokerage performance. As a growing number of high-quality technology firms enter the capital markets, brokerages are actively channeling funds through their alternative investment and private equity subsidiaries to build deep positions in the sector. Mid-year reports show that among 43 A-share listed brokerages, 36 alternative investment units and 34 private equity subsidiaries posted profits.
Alternative investment subsidiaries have delivered particularly strong results. Reviewing the 2026 interim reports of listed brokerages, 40 of the 43 disclosed first-half performance for their alternative units, with 36 of these turning a profit. Leading the pack, the alternative subsidiary of Guotai Haitong, Guotai Haitong Zhengyu Investment, booked revenue of 8.79 billion yuan, roughly 18% of Guotai Haitong's total, and net profit of 6.507 billion yuan, about 32% of the parent's attributable net profit for the period. Following closely, China Merchants Securities' alternative arm, Zhaozheng Investment, generated revenue of 6.97 billion yuan and net profit of 5.22 billion yuan in the first half, contributing nearly half of the brokerage's 10.624 billion yuan attributable net profit.
Several other top-tier brokerages also posted solid gains from their alternative units. For instance, CITIC Securities Investment achieved revenue of 2.655 billion yuan and net profit of 1.975 billion yuan, while CSC Financial Investment reported revenue of 1.774 billion yuan and net profit of 1.317 billion yuan during the same period.
Notably, despite the significant capital requirements of alternative investment, this arena has not become an exclusive domain for large brokerages. Instead, it offers opportunities for smaller players to make a leap. In the first half, the alternative subsidiaries of Changjiang Securities, Orient Securities, and Huaan Securities posted net profits of 901 million yuan, 552 million yuan, and 534 million yuan respectively, outperforming several larger counterparts and ranking fifth through seventh among listed brokerages' alternative units.
In terms of capital allocation, a consensus has formed around doubling down on "hard tech" sectors. CITIC Securities Investment continues to scout high-potential targets in semiconductors, artificial intelligence, and advanced manufacturing, with new additions in the first half spanning wafer foundry, silicon-based anode materials, advanced packaging, and semiconductor equipment. Meanwhile, Guotai Haitong Zhengyu Investment added or expanded 21 projects worth 1.085 billion yuan, all directed at hard tech fields.
Beyond alternative subsidiaries, private equity units also serve as a critical channel for tech innovation investment. Of the 43 listed brokerages, 41 disclosed interim results for their PE arms, with 34 reporting profits. Guotai Haitong again topped this list, with its subsidiary Guotai Haitong Kaiyuan generating net profit of 799 million yuan. China Merchants Zhiyuan Capital, Huaan Jiaye, and Huatai Zijin Investment followed with net profits of 632 million yuan, 571 million yuan, and 514 million yuan, respectively.
Wang Hongying, president of the China (Hong Kong) Financial Derivatives Investment Research Institute, noted that alternative and PE subsidiaries each bring distinct strengths to tech innovation investing, collectively forming a vital platform for brokerages to support technological advancement. "Alternative subsidiaries can act as long-term capital, deeply engaging in the growth of tech firms while working closely with in-house research and investment banking arms, generating substantial returns through co-investment. In recent years, many have leveraged this model effectively. PE subsidiaries, by contrast, offer more flexible approaches, raising capital as general partners and collaborating with diverse social capital to scale up tech investments."
Zhao Ran, chief analyst for non-bank financials and fintech at CSC Financial, observed that many brokerages saw notable gains in equity investment returns from tech enterprises in the first half, with semiconductor and storage-related targets delivering significant incremental profits. These returns stem from multiple channels, including direct investment, alternative investment, STAR Market co-investment, and private equity fund contributions, and are likely to become a major driver of sustained earnings growth for brokerages.
Industry-wide, brokerages are ramping up their alternative investment efforts this year. In late July, Zheshang Securities announced plans to inject 1 billion yuan into its alternative subsidiary Zheshang Investment. On August 20, Caida Securities revealed it would invest 250 million yuan to establish a new alternative unit, Caida Innovation.
"Alternative and PE subsidiaries' deep involvement in tech innovation has evolved from a supplementary business into a strategic focus," said Chen Cong, deputy director of the Western Financial Research Institute. "Brokerages hold unique advantages in industry analysis, business synergy, and capital allocation. With policy support continuing and exit pathways maturing, tech innovation investment by brokerages is poised for broader growth. However, profit dispersion within the industry is widening, and the ability to build multidisciplinary teams skilled in technology, industry insight, and capital operations will be pivotal in shaping future competitiveness."