Investment Rating - The report maintains a positive outlook on the non-bank financial sector, indicating an "Overweight" investment rating for the industry [2][3]. Core Insights - The brokerage sector has experienced a recent adjustment, with the Shenwan Brokerage II Index declining by 3.51%, underperforming the CSI 300 Index by 3.07 percentage points. However, the sector is expected to maintain double-digit year-on-year profit growth in Q3 2025, supported by ongoing capital inflows [3][6]. - The insurance sector has seen a decline of 4.76% in the Shenwan Insurance II Index, with significant movements such as Ping An Life increasing its stake in China Pacific Insurance to over 10%. This reflects a strong positive outlook from insurance capital towards the sector [3][8]. - The report highlights the upcoming National New Conference on September 22, which is anticipated to bring new policies that could positively impact market sentiment [3][15]. Summary by Sections Market Review - The CSI 300 Index closed at 4501.92 with a slight decline of 0.44%. The non-bank index reported a drop of 3.66%, with the brokerage, insurance, and diversified financial sectors showing declines of 3.51%, 4.76%, and 0.50% respectively [6][8]. Non-Bank Industry Key Data - As of September 19, 2025, the 10-year government bond yield was 1.88%, with a slight increase of 0.65 basis points. The average daily stock trading volume reached 25,181.36 billion yuan, reflecting an increase of 8.23% week-on-week [11][14]. Non-Bank Industry News and Key Announcements - The report notes that the property insurance sector achieved a record high in underwriting profits in the first half of 2025, with premium growth of 4.2% [16]. - Ping An Life's recent acquisition of shares in China Pacific Insurance is seen as a strong signal of confidence in the insurance sector's investment value [19]. - China Pacific Insurance announced the completion of a convertible bond issuance, which is expected to enhance its capital position [20]. Investment Recommendations - For brokerages, the report recommends focusing on leading firms benefiting from improved competitive dynamics, such as GF Securities, Guotai Junan, and CITIC Securities. It also suggests considering firms with strong international business capabilities like China Galaxy and CICC [3][8]. - In the insurance sector, the report recommends China Life, China Pacific, New China Life, and Ping An, among others, due to their favorable valuation and growth prospects [3][8].

Investment Rating - The report maintains an "Overweight" rating for the securities industry [7]. Core Insights - The securities industry is currently in a strategic opportunity period for balance sheet expansion, transitioning from a cyclical expansion to a resilient expansion phase, with large brokerages leading the way [16][19]. - The expansion of balance sheets is driven by fixed income investments, with a notable increase in contributions from subsidiaries, indicating a shift in operational strategy [17]. - The report emphasizes the importance of balance sheet management as a core profit source and a reflection of industry trends, highlighting the need for comprehensive asset allocation and international collaboration [19][20]. Summary by Sections Current Stage of Balance Sheet Expansion - The industry is moving from cyclical to resilient expansion, with total assets expected to reach 12.93 trillion yuan by the end of 2024, reflecting a 12% CAGR over the past decade [16][21]. Importance of Balance Sheet Management - Balance sheet management is crucial for securities firms, as it directly impacts their operational efficiency and profitability, with a focus on optimizing asset allocation under resource constraints [20][22]. Nature of Balance Sheet Expansion - The expansion is primarily driven by the growth of the capital markets, with a strong correlation between the total assets of the securities industry and the performance of the equity and bond markets [24]. Future Outlook for Expansion - The report anticipates that the balance sheet will continue to expand alongside the growth of equity and bond markets, with significant potential in the derivatives market, which is currently underdeveloped compared to international standards [27][28]. Paths for Balance Sheet Expansion - The report outlines three main paths for expansion: external mergers and acquisitions, internal growth through regulatory innovation, and international expansion [32][39]. Characteristics of the Current Expansion Cycle - The current cycle is characterized by a focus on fixed income investments, stable leverage levels, and increased contributions from subsidiaries, particularly in international markets [17][18]. Comparison with International Peers - Chinese securities firms are still catching up with their international counterparts, with significant room for growth in both scale and core capabilities [18][19]. Recommendations for Investment - The report suggests focusing on leading firms with strong balance sheet management capabilities, such as CITIC Securities, Guotai Junan, and China Galaxy, as they are expected to enhance capital returns during the expansion phase [19].