Core Viewpoints - The report maintains a positive outlook on the brokerage sector, emphasizing the relative return opportunities within the non-bank financial sector as the market transitions from a stock market to an incremental market since June 2025 [5][6]. Summary by Sections Market Dynamics - The A-share market has shifted to an incremental market, with trading activity increasing significantly. On July 22, 2025, the total transaction volume across three exchanges reached 1.93 trillion yuan, marking an 11.7% increase from the previous trading day. The margin financing and securities lending balance was 1.9 trillion yuan, up 0.8%, with financing purchases increasing by 7.6% [5]. Performance Forecast - For the first half of 2025, 29 brokerages that have announced profit forecasts expect a net profit growth rate of 75.02% year-on-year, with the second quarter projected to grow by 20.66%. The top five brokerages by profit growth include Huaxi Securities (1189.5%), Guolian Minsheng (1183.0%), and Guosheng Jin控 (315.5%) [6]. Regulatory and Business Innovations - The report highlights the potential benefits for brokerages from the upcoming stablecoin regulations in Hong Kong, effective August 1, 2025. Chinese brokerages are upgrading their virtual asset trading licenses, which could open new revenue streams through cryptocurrency trading commissions and stablecoin cross-border settlement [7]. Valuation Discrepancies - The report notes a significant valuation gap between H-shares and A-shares of brokerages. As of July 22, 2025, H-shares have increased by 73.9%, while A-shares have only risen by 22.0%, resulting in a 51.9% difference. The average price-to-book ratio for H-shares is 1.0, compared to 1.5 for A-shares, indicating potential for A-shares to catch up [7]. Market Sentiment and Fund Flows - The report discusses a shift in investor sentiment from a trading strategy to a holding strategy, suggesting that the current brokerage market rally may be slower but more sustainable. The implementation of policies aimed at promoting high-quality development in public funds is expected to attract more capital into the underweighted non-bank financial sector, benefiting brokerages [8]. Investment Recommendations - The report suggests focusing on leading brokerages and financial technology leaders that are likely to benefit from active market trading [9][10].

Investment Rating - The report maintains an "Overweight" rating for the brokerage sector [2] Core Viewpoints - The brokerage sector is expected to benefit from the transition of the A-share market from a stock market to an incremental market, with trading activity increasing and overall market valuations rising [5][6] - The forecasted net profit growth for the brokerage firms in the first half of 2025 is projected to be 75.02%, with significant contributions from leading firms [5][8] - The report highlights the potential for brokers to benefit from stablecoin developments and virtual asset license upgrades, which could create new growth opportunities [5] - There is a notable price discrepancy between A-shares and H-shares of brokerage firms, indicating potential for A-shares to catch up [5][9] - The report suggests that the current market environment is conducive for investing in underperforming brokerage stocks, with a focus on leading firms and fintech companies [5] Summary by Sections Industry Overview - The total number of listed companies in the brokerage sector is 83, with a total market value of 76,326.04 billion yuan and a circulating market value of 73,589.02 billion yuan [2] Market Dynamics - The A-share market has seen a significant increase in trading volume, with a transaction amount of 1.93 trillion yuan on July 22, 2025, marking an 11.7% increase from the previous trading day [5] - The financing balance in the market reached 1.9 trillion yuan, reflecting a 0.8% increase, while the financing purchase balance increased by 7.6% [5] Performance Forecast - The report indicates that 29 brokerage firms have forecasted a net profit growth of 75.02% for the first half of 2025, with the second quarter showing a 20.66% year-on-year growth [5][8] - The top five firms by net profit growth include Huaxi Securities (1189.5%), Guolian Minsheng (1183.0%), and Guosheng Jinkong (315.5%) [5][8] Investment Recommendations - The report recommends focusing on leading brokerage firms such as Guotai Junan, CITIC Securities, and Orient Securities, as well as fintech leaders like Dongfang Wealth and Zhinancun [5]

Core Viewpoint - Zhongzhou Securities has gained significant attention from institutional investors, with both Barclays PLC and E Fund becoming major shareholders, each holding over 5% of the company [1][3][7]. Group 1: Institutional Investment - Barclays PLC has acquired approximately 148.9 million shares of Zhongzhou Securities, representing a 12.46% stake, while also holding a short position of about 2.42% [4][6]. - E Fund increased its holdings to 62.96 million shares, raising its ownership from 4.79% to 5.27%, making it the third-largest shareholder [7]. Group 2: Company Performance - Zhongzhou Securities reported a revenue of 401 million yuan in Q1, a year-on-year decline of 37.7%, and a net profit of 103 million yuan, down 21.3% [1][14]. - The company has undergone leadership changes, with Zhang Qiuyun appointed as the new chairman in April 2023, tasked with reversing the declining performance [10][12]. Group 3: Market Context - On July 11, the stock price of Zhongzhou Securities surged by 75%, attributed to market speculation regarding the upcoming implementation of stablecoin regulations [3][8]. - The company holds licenses for virtual asset operations in Hong Kong, although it has not yet commenced stablecoin-related business [8]. Group 4: Future Outlook - The new chairman aims to lead Zhongzhou Securities into a "second entrepreneurship" phase, focusing on strategic development and enhancing its role in the capital market [14]. - The company is expected to align its operations with the strategic directives of the Henan provincial government to improve its business performance [14].

Investment Rating - The report maintains an "Overweight" rating for the non-bank financial sector [1] Core Insights - The life insurance premium continues to grow significantly, with a focus on the virtual asset license theme [1] - The non-bank financial sector has shown resilience, with various sub-sectors outperforming the CSI 300 index recently [9][10] - The insurance sector is expected to benefit from economic recovery and rising interest rates, while the securities sector is poised for growth due to favorable market conditions [44] Summary by Sections Non-Bank Financial Sub-Sector Performance - All sub-sectors of non-bank financials outperformed the CSI 300 index in the recent five trading days, with multi-financials up 9.96%, securities up 7.56%, and insurance up 3.89% [9] - Year-to-date, the insurance sector has performed the best, followed by multi-financials, while the securities sector has seen a decline [10] Securities Sector - Trading volume has significantly increased, with the average daily trading amount for June reaching 15,212 billion yuan, an increase of 84.97% year-on-year [15] - The heat for virtual asset licenses is rising, with major Chinese brokers like Guotai Junan International obtaining licenses to provide virtual asset trading services [19] - The average price-to-book (PB) ratio for the securities industry is estimated at 1.2x for 2025, indicating potential for growth [22] Insurance Sector - Life insurance premiums have shown a positive trend, with total premiums for the first five months of 2025 reaching 24,473 billion yuan, a year-on-year increase of 3.7% [24] - The regulatory focus is on promoting inclusive finance, with initiatives aimed at enhancing the supply of inclusive insurance products [26] - The insurance sector is characterized by a significant cyclical nature, with expectations for improved performance as the economy recovers [28] Multi-Financial Sector - The trust industry is entering a stable transition phase, with total trust assets reaching 29.56 trillion yuan by the end of 2024, a year-on-year increase of 23.58% [29] - The futures market saw a decline in trading volume and value in May 2025, but is expected to recover due to increased demand for risk management [36] - The report suggests that innovative risk management services will be a key growth area for the futures industry moving forward [42] Industry Ranking and Key Company Recommendations - The recommended ranking for the industry is insurance > securities > other multi-financials, with key companies including New China Life, China Pacific Insurance, China Life, China Ping An, CITIC Securities, Tonghuashun, and Jiufang Zhitu Holdings [44]

Group 1 - Several local Hong Kong brokerages, such as Victory Securities and Adept Securities, have completed the upgrade of License No. 1, indicating a growing trend in the market [1] - Guotai Junan International is not the only Chinese brokerage applying for a license, suggesting that more institutions may enter the market in the future [1] - The brokerages primarily engage in "distribution" type trading services rather than operating their own exchanges, focusing on mainstream compliant cryptocurrencies like BTC and ETH [1] Group 2 - These brokerages have established omnibus accounts within licensed exchanges to provide clients with trading channels for compliant cryptocurrencies, while avoiding high-risk altcoins or tokens [1] - Compliance requirements for customer due diligence (KYC), suitability management, and investor education among these brokerages are largely consistent with those of Guotai Junan International [1] - All mentioned brokerages prohibit mainland Chinese residents from participating in trading activities [1]