Core Viewpoint - The core driver for excess returns in the securities sector is policy and conference signals, indicating that the sector's allocation value is underestimated despite its significant position in the A-share market [1][2]. Group 1: Market Position and Challenges - The securities industry holds a crucial position in the A-share market, but it has long faced issues such as high volatility, timing difficulties, and stock selection challenges, leading to a lower allocation ratio from active equity investment institutions [2]. - Research indicates that the investment opportunities for excess returns in the securities sector are significantly greater than those for absolute returns, suggesting an undervaluation of the sector's allocation value [2]. Group 2: Driving Factors - The report identifies three main types of signals that drive excess returns in the securities sector: 1. Positive capital market policy signals for the securities industry 2. Macroeconomic signals that enhance trading activity 3. Targeted signals benefiting specific brokers or businesses - Under these three driving conditions, the average excess returns of the securities sector relative to the market are ranked as follows: 1) policy signals > 3) targeted signals > 2) macroeconomic signals, highlighting the importance of monitoring meetings related to financial work and capital markets [2][3]. Group 3: Stock Selection Strategies - Within the three driving scenarios, there is significant differentiation in stock performance within the securities sector: 1. In scenario one, most brokers outperform the securities index, with smaller or newly listed brokers often leading in relative gains due to lower capital requirements 2. In scenario two, brokers with a high proportion of brokerage and margin financing business tend to lead in relative gains 3. In scenario three, brokers that align with specific policy benefits or have clear mapping logic tend to outperform [3]. - Overall, the number of brokers outperforming the securities index is ranked as follows: 1) > 2) > 3) [3]. Group 4: Timing Strategies - In terms of relative returns, the cumulative returns from holding the securities sector during market periods do not significantly differ from the maximum returns achieved through precise timing, contrasting with absolute return scenarios [3]. - Generally, the start date of market rallies and the date of the lowest price are very close, while the peak price dates for different broker stocks show considerable variation, suggesting that early intervention during market rallies has a higher probability of success compared to mid-cycle entry [3].