Investment Rating - The investment rating for the non-bank financial sector is "Outperform the Market" [2][7]. Core Viewpoints - The report indicates that the securities industry is entering a new phase of mergers and acquisitions, termed "M&A 2.0," which emphasizes functional enhancement and the creation of a complementary business ecosystem rather than merely increasing capital size [3][5]. - The report highlights that recent mergers, such as the absorption of Dongxing Securities and Xinda Securities by CICC, reflect a shift towards strengthening professional capabilities and expanding business lines [4][18]. - The overall improvement in the securities industry's fundamentals, including active market trading and growth in margin financing, is expected to drive both valuations and profitability for brokerages [4][22]. Summary by Sections Industry Overview - The report notes a significant wave of mergers and restructuring in China's securities industry, driven by both policy support and market competition. The aim is to cultivate leading investment banks and enhance core competitiveness through consolidation [6][10]. - In the first three quarters of 2025, 43 listed brokerages achieved revenue of CNY 421.42 billion, a year-on-year increase of 42.57%, and a net profit of CNY 169.29 billion, up 62.48% [6]. Mergers and Acquisitions - The merger between Guotai Junan and Haitong Securities is highlighted as a scale-driven consolidation, significantly enhancing net capital strength and risk tolerance, while optimizing the national network layout [15][17]. - CICC's merger with Dongxing and Xinda Securities is characterized as a functional superiority-driven integration, aimed at enhancing business capabilities and expanding service offerings [18][20]. Business Structure and Performance - The report outlines a dual-driven characteristic in the securities industry, with brokerage and proprietary trading as the main revenue drivers. In the first three quarters of 2025, brokerage income reached CNY 111.78 billion, a year-on-year increase of 74.64% [11]. - The revenue structure is shifting, with brokerage income accounting for 26.5%, investment income 44.4%, and other segments contributing to the overall performance [11]. Investment Recommendations - The report suggests that the recent mergers are likely to stimulate investment enthusiasm in the industry. It recommends focusing on leading brokerages with comprehensive performance layouts and those with high elasticity in earnings, such as Huatai Securities and CITIC Securities [22].

Core Viewpoint - The current securities market is experiencing increased activity, with brokerages competing for clients through attractive commission rates and services, while also responding to regulatory requirements and market conditions [3][4][9]. Group 1: Brokerage Commission Rates - Many brokerages are offering commission rates around "0.15%" and "0.1%", with some providing even lower rates of "0.0854%" and "0.0841%" for clients with larger account balances [3][5][6]. - The threshold for enjoying lower commission rates is generally set at 500,000 yuan, with some brokerages requiring 3 million yuan for the lowest rates [6][9]. - Despite the competitive environment, major brokerages have not significantly lowered their commission rates, maintaining a standard of "0.15%" for accounts above 300,000 yuan [6][9]. Group 2: Margin Trading and Financing Rates - The margin trading balance has reached 2.1 trillion yuan, indicating a strong interest from investors in margin accounts [8]. - Financing rates for new margin accounts range from 4% to 5.5%, with larger accounts receiving more favorable rates [8][9]. - The trend shows that while some brokerages offer competitive financing rates, the majority maintain rates around 5%, reflecting a cautious approach to pricing strategies [9]. Group 3: Investor Behavior and Market Trends - Current investor participation is lower compared to previous market peaks, with retail investors showing limited engagement in the stock market [11][12]. - High-net-worth individuals are entering the market, but overall retail investment remains subdued, with funds primarily flowing into bank wealth management products [11]. - There are indications of a shift in resident savings, with approximately 5 trillion to 7 trillion yuan identified as potential funds for market entry, driven by excess savings and maturing deposits [11][12].