Investment Rating - The report maintains an "Overweight" rating for the non-bank financial industry, specifically focusing on the international business of brokerage firms [1]. Core Insights - Multiple driving forces are converging, marking a strategic opportunity period for brokerage firms to expand internationally. This includes policy empowerment, market expansion, and profit optimization [5][11]. - The international business of brokerage firms is steadily advancing, with significant growth potential as contributions from overseas operations increase [30]. - Long-term growth opportunities remain abundant, with various business lines collaborating to unlock growth ceilings [11][30]. Summary by Sections 1. Multiple Driving Forces Converging - **Policy Empowerment**: National strategies emphasize the necessity for brokerage firms to expand internationally, with supportive policies being established to facilitate this transition [11][12]. - **Market Expansion**: The Hong Kong IPO market is significantly expanding due to ongoing reforms, providing ample opportunities for brokerage firms to engage in new markets [14][15]. - **Profit Optimization**: Overseas operations exhibit a notable return on equity (ROE) advantage compared to domestic businesses, driven by higher leverage and operational efficiency [19][22]. 2. Accelerated International Business Development - **Increasing Contribution from Overseas Operations**: The number of overseas subsidiaries has grown, with a focus on regions like Hong Kong and Southeast Asia, enhancing the overall revenue structure of brokerage firms [30]. - **Dominance of Investment Income**: Investment income is the primary revenue source for overseas operations, supported by wealth management and investment banking services [30][31]. 3. Long-term Growth Potential - **Comparative Gaps with Global Leaders**: Chinese brokerage firms still lag behind international leaders like Goldman Sachs in terms of international revenue, indicating substantial growth potential [11][30]. - **Development Opportunities Across Business Lines**: Various sectors within the brokerage industry are poised for growth, including cross-border investment banking and wealth management, driven by increasing demand for international services [11][30]. 4. Investment Recommendations - The report recommends focusing on leading brokerage firms with strong international business capabilities, such as CITIC Securities, CICC, Huatai Securities, and others, which are expected to benefit from the ongoing internationalization trend [5][30].

Macro Overview - The article identifies three historical "great migrations" of Chinese household wealth, with the first two occurring between 1998-2018 and 2018-2023, and the third migration beginning in 2023 [2][4][5]. First Historical Migration - The first migration, termed "moving deposits," occurred from 1998 to 2018, driven by the housing system reform in 1998, which led to a significant flow of deposits into real estate and related assets [3][9]. - This migration can be divided into two phases: 1. From 1998 to 2008, real estate established a core position in household balance sheets, with rising property prices attracting direct purchases and pushing up returns on related financial products [9]. 2. From 2008 to 2018, the asset management industry expanded rapidly, further accelerating the flow of funds into real estate and related financial assets [9]. Second Historical Migration - The second migration, termed "returning deposits," occurred from 2018 to 2023, as the real estate market entered a downturn, leading to decreased returns and increased risks associated with real estate investments [4][9]. - Regulatory changes, such as the new asset management regulations, contributed to a shift back to deposits, reflecting a decline in risk appetite among residents [4]. Third Historical Migration - The third migration, referred to as the "era of 'deposits +'," began in 2023, indicating a shift in wealth allocation strategies among residents [5]. - This migration is characterized by a reallocation of wealth towards financial products that offer stable returns while maintaining capital protection, rather than solely focusing on traditional deposits [9]. - The article emphasizes that this "deposits +" concept is not limited to specific financial products but represents a broader wealth allocation philosophy [9]. Investment Implications - The article suggests that the current trend of wealth migration may lead to increased interest in financial products that provide stable returns, especially in a low inflation environment [9]. - It highlights the importance of monitoring inflation expectations, as a significant rise could alter the direction of wealth allocation [9].

Core Viewpoint - The internationalization of securities firms is a proactive choice for their business development and is essential for building a world-class investment bank, with the expectation that international business will become a significant driver of performance growth for leading firms [1][2]. Group 1: International Business Development - International business has become a crucial focus for securities firms, with the profit contribution from international subsidiaries of 18 sample firms increasing from 0.7% in 2018 to 58.2% in the first half of 2023 [1]. - Leading firms like CITIC Securities, China International Capital Corporation (CICC), and Huatai Securities have seen international business profit contributions of 20%, 55%, and 14% respectively, indicating that international business is a major driver of profit growth for top firms [1]. - There is a noticeable trend of capital increase in international subsidiaries by Chinese securities firms since 2025, with firms like GF Securities and Huatai Securities planning to enhance their international business capital strength [1][2]. Group 2: Strategic Importance of Internationalization - The internationalization of securities firms is a necessary path under the strategy of becoming a financial powerhouse, as seen in global leaders like Goldman Sachs and Morgan Stanley, which leveraged local enterprises' cross-border needs to transition into international investment banks [2]. - The construction of a world-class investment bank requires firms to have a voice in capital allocation and asset pricing in international markets, supporting high-level openness and national rise [2]. - International business is expected to be a primary direction for the expansion of leading securities firms, especially in a context where domestic equity self-operation has not seen significant expansion [2]. Group 3: Business Segments in International Operations - Wealth management is witnessing growth in demand from Chinese residents for cross-border asset allocation services, which is expected to become a new growth engine for international business [3]. - The investment banking sector is increasingly active due to the Belt and Road Initiative and the globalization strategies of Chinese enterprises, leading to more overseas development, cross-border financing, and mergers and acquisitions [3]. - Cross-border proprietary trading has gained attention as the domestic fixed income market shows signs of "asset scarcity," making the overseas bond market more attractive for investment opportunities [3]. Group 4: Future Outlook - Global leading securities firms typically have over 30% of their business in international operations, and with the rising demand for overseas expansion from domestic enterprises and cross-border investment needs from domestic investors, international business is expected to steadily increase its profit share among leading firms [4].