Chinese brokerage stocks continued their downward trend in Hong Kong trading. At the time of writing, shares of Guotai Haitong (02611) were down 3.65% at HK$14.27, Oriental Securities (03958) fell 3.55% to HK$5.43, and Everbright Securities (06178) dropped 3.49% to HK$7.47.

The moves follow news that new cross-border equity total return swaps (TRS) have been explicitly suspended. Goldman Sachs analysts noted that the tightening of cross-border TRS rules is not a new development. Using both stock-based and flow-based models, the firm estimates that cross-border equity TRS contributes only about 1% to 4% of revenue for eligible brokerages, suggesting the impact is relatively limited. Furthermore, a reduction in the scale of this business is not expected to lead to significant asset impairment losses.

Additionally, the technology sector saw notable weakness on Friday. Recent commentary has suggested that listed brokerages acquiring stakes in tech firms through mandatory follow-on investments in the STAR Market and equity investments means that buying brokerage stocks is akin to buying a discounted tech fund. China International Capital Corporation (CICC) previously stated that under the "three-investment linkage" model, brokerages' profit models are shifting from commission-based income to value discovery across the entire lifecycle of technology innovation enterprises.