Core Viewpoint - The securities industry is expected to experience a recovery in performance and valuation in the second half of 2025, driven by multiple positive factors despite recent market underperformance [2][5]. Group 1: Industry Performance and Outlook - As of June 18, 2025, the A-share securities index has declined by 7.51% since the beginning of the year, but the industry's fundamentals continue to improve, with active trading in the A-share market and ongoing capital market reforms [5]. - Citic Securities projects a 17.3% year-on-year growth in net profit for the securities industry in 2025, with an annualized ROE expected to rise to 6% [6]. - Huatai Securities highlights that the implementation of new policies will foster a market environment conducive to long-term investment, benefiting the growth of securities firms [6]. Group 2: Investment Opportunities - Three investment themes are recommended for the securities sector: firms expected to achieve high growth in mid-2025 with low valuations, leading comprehensive securities firms with balanced business structures, and firms with potential for mergers and acquisitions [3][7]. - Citic Securities suggests focusing on firms that are likely to see significant performance improvements in brokerage and investment trading, as well as those involved in ongoing mergers and acquisitions [8]. Group 3: Industry Transformation - The current securities industry is undergoing significant transformation, with a focus on enhancing trading capabilities, exploring cross-border asset allocation, and increasing investment in client-driven services [9]. - The "Public Fund High-Quality Development Action Plan" is expected to promote high-quality expansion in the industry and favor the differentiated development of fund companies, particularly benefiting leading public securities firms [9].

Core Viewpoint - The surge in the securities sector is driven by favorable policies and merger expectations, with significant capital inflow into the A-share market and notable stock price increases among major brokerage firms [1][4][7]. Group 1: Market Performance - Over 2.4 billion in main capital flowed into the securities sector, leading to substantial gains in individual stocks, including a limit-up for Industrial Securities and over 8% increase for Xinda Securities [1]. - In the Hong Kong market, major brokerage stocks also saw significant increases, with Guangfa Securities rising by 6.5% and Huatai Securities by 5% [3]. Group 2: Policy Impact - The recent policy released on June 10 allows companies listed on the Hong Kong Stock Exchange to also list on the Shenzhen Stock Exchange, which is expected to expand the investment banking business for brokerages [4][6]. - This policy is anticipated to enhance market connectivity and trading activity, directly benefiting brokerage businesses [6]. Group 3: Mergers and Acquisitions - The market is optimistic about mergers and acquisitions due to the recent change in control of several brokerages to Central Huijin, which is expected to reduce integration barriers among brokerages [7]. - The trend of mergers is likely to create significant synergies, further driving stock prices upward [7]. Group 4: Stock Buybacks - Several brokerages have announced stock buybacks, signaling confidence in their long-term development and enhancing shareholder returns [8][9]. - The buybacks are seen as a positive signal for the sector's investment attractiveness [9]. Group 5: Valuation and Investment Opportunities - The current valuation of the brokerage sector is considered attractive, with a price-to-book ratio (PB) around 1.33x, indicating potential for investment [10]. - Analysts suggest that the sector's profitability and valuation are expected to rise, driven by improved market conditions and strategic business expansions [11].