Summary of Key Points from the Conference Call Industry Overview - **Industry**: Securities Broker/Dealer in China - **Period Covered**: 1H25 Core Insights and Arguments 1. **Revenue and Earnings Growth**: Brokers reported better-than-expected revenue and earnings growth in 1H25, with net profit increasing by 40% YoY (excluding one-offs) and total operating income rising by 24% YoY [1][9][10] 2. **Fee Income Recovery**: Fee income returned to double-digit growth for the first time since 2022, with an 18% YoY increase in fee income and a 48% YoY surge in trading income on average [1][33] 3. **Market Sentiment**: The growth was supported by a rebound in market sentiment, strong market turnover, and a recovery in equity fund AUM [1][33] 4. **Brokerage Fee Growth**: Brokerage fees grew by 35% YoY on average, accounting for 24% of revenue, driven by market share gains and improved client mix [34] 5. **Offshore Revenue Contribution**: Offshore revenue contribution increased to 12% in 1H25 from 9% in 2024, with CICC leading at 31% revenue contribution from offshore [3][27] 6. **Trading Income Dynamics**: Trading income surged by 48% YoY, contributing to 48% of operating income, with CITICS and CICC leading in trading yield [50][52] 7. **Investment Banking Opportunities**: Investment banking fees contributed to 6% of revenue, with significant growth driven by HK IPOs, particularly for CICC and CITICS [45][49] 8. **Cost-to-Income Ratio Improvement**: All brokers saw improvements in their cost-to-income ratios due to strong revenue growth [16][60] Additional Important Insights 1. **A-Share Market Performance**: The A-share market recorded the strongest half-year average daily turnover (ADT) in history at RMB1.98 trillion, which is expected to drive brokerage commissions and product sales fees in 3Q25E [2][35] 2. **Asset Management Growth**: Asset management fees grew by 3-29% YoY, with stock and hybrid mutual fund AUM reaching a new high of RMB8.8 trillion [39][41] 3. **New Stock Accounts**: There was a sequential improvement in new stock accounts opened, with 1.96 million in July and 2.65 million in August [36] 4. **Mixed Trading Outlook**: While trading income is expected to remain strong, there are concerns about bond market performance affecting trading income in 3Q25E [4][51] 5. **Regulatory Environment**: The regulatory focus may shift towards loosening IPO requirements for the STAR Market, which could impact future A-share IPO fundraising [45] This summary encapsulates the key points discussed in the conference call, highlighting the positive trends in revenue, fee income, and market dynamics while also noting potential challenges and regulatory considerations.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the A-share market in China, which is currently experiencing a rally. Investors are advised to monitor specific data points to gauge market conditions and potential investment opportunities [1] Tier 1 Data Points Velocity - Current velocity is at **560%** in August, an increase from **467%** in July. This level is comparable to **610-636%** in October-November 2024 but below the **680-910%** range seen in April-August 2015. High velocity indicates strong fund inflow and active trading, primarily from retail investors. A sustained velocity above **600%** for 2-3 months may indicate an overheated market [3][4][6] Market Leverage - The current market leverage stands at **6.8%**, up from **6.5%** at the end of July. This is still below the **7.0-9.8%** range observed from December 2014 to June 2015. A leverage level above **7.5%** could signal an overheated market [7][11] Turnover Mix - The turnover mix, which reflects margin financing-related turnover as a percentage of total turnover, is currently at **12%**, up from **10%** at the end of July. Historically, levels above **12-13%** have prompted regulatory actions to cool down the market [13][14] Tier 2 Data Points Market Turnover - The average daily market turnover in the past week was **RMB2.7 trillion**, up from **RMB1.6 trillion** in July and **RMB1.4 trillion** in the first half of 2025. The peak turnover has already exceeded levels seen in 2015, indicating strong market activity [16][17] Margin Financing Size - The outstanding margin financing balance is at **RMB2.17 trillion**, an increase from **RMB1.97 trillion** at the end of July. This is close to the previous peak of **RMB2.27 trillion** in 2015 [20][21] Tier 3 Data Points New Mutual Fund Raising - Weekly new stock and mutual fund raising averaged **RMB11 billion** for the first three weeks of August, which is stronger than the **RMB10 billion** average year-to-date and indicates increased retail participation in a strong market [24][25] Tier 4 Data Points New Account Opening - The Shanghai Stock Exchange saw **1.96 million** new accounts opened in July, consistent with the average of **2.1 million** from January to June but significantly below the peak of **6.8 million** in October 2024. This metric is lagging and may indicate future market participation if the rally continues [28][29] Deposit Movement - Recent trends show a deceleration in household deposit growth alongside an acceleration in deposits at non-bank financial institutions, suggesting a potential shift of funds from the banking system to the stock market [31][33] Conclusion - The A-share market is showing signs of strong activity, with key metrics indicating potential overheating. Investors should closely monitor velocity, market leverage, turnover mix, and new account openings to assess market conditions and make informed investment decisions [1][3][7][13][28]