Performance forecasts for listed brokerages in the first half of the year are being released one after another. The combined Guotai Haitong has delivered impressive results, attracting significant market attention. Against a backdrop of rising trading activity in the A-share market, a rebound in equity investment banking, and concentrated returns from investments in the technology innovation sector, institutions widely anticipate that listed brokerages will achieve rapid overall earnings growth for the first half. The current divergence between sector valuation and fundamentals is expected to gradually correct as mid-year earnings act as a catalyst.

Industry Consolidation Enters Profit Realization Phase

On the evening of July 3rd, Guotai Haitong released its preliminary half-year results for 2026. The company expects to achieve a net profit attributable to shareholders of 20.003 billion to 20.511 billion yuan, representing a year-on-year increase of 27% to 30%. Adjusted net profit is forecasted to be between 19.249 billion and 19.757 billion yuan, soaring 164% to 171% year-on-year, setting a new historical high for the company's half-year performance. On a quarterly basis, the second quarter is expected to see net profit attributable to shareholders of 13.615 billion to 14.123 billion yuan, a substantial year-on-year jump of 290% to 304%, and a sequential increase of 113% to 121%.

Chief Non-Bank and Fintech Analyst Zhao Ran from CITIC Securities believes this earnings preview from Guotai Haitong sends three positive signals for the industry. First, industry consolidation is moving from speculative expectations into a phase of actual profit generation. The combined entity's enhanced capability to handle large projects and the amplified leverage effect are systematically lifting the return on equity (ROE) baseline for brokerages. Second, the sustainability of the industry's positive momentum may exceed expectations, with simultaneous and mutually reinforcing growth in brokerage, investment banking, and proprietary trading, indicating a shift upward in the operational baseline for leading firms. Third, diversified revenue streams are fully opening up, as brokerages transition from reliance on a single beta driver towards a more complex growth model.

On the evening of July 7th, China Merchants Securities released its 2026 half-year earnings preview, forecasting a net profit attributable to shareholders of 10 billion to 11 billion yuan, marking a year-on-year increase of 93% to 112%.

From an industry-wide perspective, benefiting from factors such as warming market activity, expansion of leveraged funds, and a recovery in primary market investment banking, various indicators for the securities market showed comprehensive improvement in the first half of 2026. Traditional core business segments of brokerages achieved synchronized marginal enhancements.

Key Business Drivers and Performance

On specific business fronts, the active A-share market and consistently high margin financing balances in the first half directly boosted commission income from brokerage, trading gains from proprietary business, and interest income from credit business. The rebound in investment banking was particularly notable. Data shows that total IPO fundraising in the A-share market for the first half reached 95.37 billion yuan, with 29.78 billion yuan in Q1 and 65.59 billion yuan in Q2. This represents an increase of 57.37 billion yuan, or 151% year-on-year, from the same period in the previous year, significantly bolstering investment banking revenue.

In the view of Chief Non-Bank Analyst Liu Xinqi from Guotai Haitong, the overall positive performance of the brokerage industry in the second quarter was primarily driven by incremental household funds entering the market, an explosion in international business, and gains from follow-on investments in the STAR Market. This profit improvement is seen as sustainable rather than a one-time gain, with leading companies benefiting particularly significantly.

Positive Earnings Momentum Continues

Data indicates that listed brokerages will begin disclosing interim reports from July 31st, with approximately 13 firms, or about one-third of the total, expected to report before August 22nd. Analyst Zhao Ran notes that the number of brokerages reporting before August 22nd is significantly higher than in the previous two years, reflecting increased confidence in their own performance.

Against the backdrop of favorable market fundamentals, major brokerage research institutions have been actively raising their expectations for listed brokers' mid-year performance. High net profit growth for the entire industry in the first half has become a market consensus, with growth drivers displaying diversified characteristics.

Research Manager Wang Siyue from China International Capital Corporation (CICC) estimates that 42 listed brokerages will achieve a combined net profit attributable to shareholders of 142.5 billion yuan in the first half of 2026, a 50% year-on-year increase. Adjusted operating revenue is projected to be 338.4 billion yuan, up 37% year-on-year. Among these, brokerage business is the primary growth driver, contributing 40% of the incremental adjusted revenue with a 58% year-on-year increase. Proprietary trading follows, contributing 29% of the incremental adjusted revenue with 23% growth. Additionally, net interest income, asset management income, and investment banking income for the first half are expected to grow 65%, 28%, and 29% year-on-year, contributing 14%, 7%, and 5% to the incremental adjusted revenue, respectively.

Team Leader Luo Huizhou of the Non-Bank Finance team at Huaxi Securities believes that for provinces or regions concentrated with emerging industries and hard-tech industrial chains, brokerages deeply entrenched in investment banking there are poised to gain returns from follow-on investments or long-term equity investments, with mid-sized brokers potentially seeing greater revenue elasticity.

Valuation Gap Presents Opportunity

Notably, a significant divergence has formed between high earnings growth and sector valuation. As of the latest update, the price-to-book ratio for the brokerage sector stands at only 1.3 times, with the sector experiencing persistent underperformance year-to-date. Institutions widely believe that the market's expectations gap regarding 2026 brokerage business is likely to narrow gradually. The first unexpectedly strong interim report preview from Guotai Haitong could serve as a catalyst for a sector valuation re-rating.

Chief Non-Bank Analyst Chen Fu from GF Securities argues that while the brokerage sector's earnings momentum continues upward, its valuation performance lags, presenting a favorable outlook for subsequent recovery. Non-Bank Financial Industry Analyst Gao Chao from Kaiyuan Securities suggests that the release of more mid-year earnings previews by brokerages in the coming period is expected to catalyze sector performance.