On the evening of September 7, CICC announced that its share-swap absorption merger involving Dongxing Securities and Xinda Securities had received approval and registration from the China Securities Regulatory Commission. As one of the largest integration cases in recent years, CICC will absorb the two brokerages by issuing 3.104 billion new shares, and upon completion of the transaction, CICC is set to join the "trillion-asset club."

Along the mergers and acquisitions front, leading brokerages are driving consolidation to become stronger and more competitive. The "three-in-one" merger involving CICC represents just one facet of the broader brokerage consolidation wave. In early September, the Securities Association of China solicited industry feedback on the "Securities Industry Demonstration Practice No. 7 - Securities Firm Mergers and Acquisitions," aimed at implementing the requirements of the new "National Nine Articles" and the "1+N" policy framework for the capital market, promoting standardized and orderly mergers, restructuring, and integration among securities firms. According to incomplete statistics, there have been eight brokerage merger cases since 2024, involving 17 securities companies. From the "three-in-one" combination under Huijin, to the integration of Shanghai state-owned assets and regional brokerage reorganizations, the industry is presenting a dual-mainline pattern of "top-tier strong alliances plus regional state capital integration." Under the goal of "cultivating first-class investment banks," industry concentration is expected to rise significantly. This is reflected in the data, as in the first half of 2026, the top 10 brokerages collectively contributed 58.85% of the industry's revenue and 63.95% of its net profit, with headquarter concentration hitting a new high.

Apart from the M&A theme, the fundamentals of the brokerage sector also warrant attention. According to data from Orient Securities, listed brokerages achieved operating revenue of RMB 371.53 billion in the first half of the year, up 43.9% year-on-year, and net profit attributable to shareholders of RMB 167.22 billion, up 48.7% year-on-year, delivering a high-growth performance overall. At the same time, sector valuations remain at historical lows. The price-to-book ratio of the CSI All-Share Securities Companies Index stands at only 1.27 times, sitting at the 16.05th percentile over the past decade. This significant divergence from robust earnings growth suggests there is room for valuation expansion. Recently, the average daily turnover in the A-share market has remained around RMB 1.98 trillion, slightly down month-on-month but still within an active historical range. Margin financing balances remain at historical highs, with leveraged funds' risk appetite still in a recovery channel, providing ample liquidity support for the market. Meanwhile, the listing of high-quality hard-tech projects and deepening reforms on the STAR Market and ChiNext are expected to generate incremental business in investment banking, direct investment, and co-investment through synergies, underpinning a continuing improvement trend in brokerage sector performance.

Looking ahead, there are multiple supporting factors for the sector's upward trajectory. 2026 marks the inaugural year of the "15th Five-Year Plan." Under the policy guidance of accelerating the building of a financial powerhouse and deepening capital market reforms, a moderately loose monetary policy, continuous optimization of the capital market environment, and the reshaping of investor confidence are among the favorable factors that could persistently drive the securities sector's upward cycle. With market activity sustained at elevated levels, wealth management transformation, international business expansion, and fintech empowerment are likely to become the driving forces for improving the industry's return on equity. Meanwhile, current valuation levels of Chinese brokerages are considered reasonably low. Scientific and technological innovation investment plus international business expansion are expected to drive the industry's ROE center higher, leaving substantial room for future upside. As sector valuations remain at historical lows, diverging significantly from strong earnings growth, a valuation recovery rally is foreseeable in the market.

For investors looking to capture this opportunity, the Securities ETF Huabao (512000) passively tracks the CSI All-Share Securities Companies Index, providing one-click exposure to 49 listed brokerage stocks. It serves as an efficient investment tool for concentrating positions in top-tier brokers while also covering small and medium-sized ones. Off-market investors can consider the feeder fund (Class A: 006098, Class C: 007531).

Data sources: Shanghai and Shenzhen Stock Exchanges, Wind, etc. Institutional views from China Galaxy Securities report dated 2026-08-03 "Financial Institution Governance Upgrade, Continuation of Strong Regulation"; Soochow Securities report dated 2026-09-04 "Securities Industry 2026 Mid-Year Report Summary and Outlook: Active Trading Drives Fee-Based Business Growth, Sci-Tech Investment Boosts Performance."

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Risk disclosure: The CSI All-Share Securities Companies Index had a base date of 2007-6-29 and was published on 2013-7-15. Its annual returns for 2021-2025 were -4.95%, -27.37%, 3.04%, 27.26%, and 2.54% respectively, with annual volatilities of 24.46%, 23.47%, 21.17%, 36.95%, and 20.53%. Constituent stocks are adjusted according to index compilation rules, and historical backtested performance does not indicate future index performance. The product is issued and managed by Huabao Fund, and distribution institutions do not bear investment, redemption, or risk management responsibilities. Investors should read fund legal documents carefully to understand risk-return characteristics and select products suitable for their risk tolerance. Sales institutions' risk evaluations may differ from the fund manager's assessment, and investors should pay attention to suitability opinions. The fund carries investment risks, and investors must proceed with caution.