Brokerages are currently in a divergence phase where their performance has high growth potential but valuations are at the low end. Institutions should focus on the repair trend of brokerages following the rebound in risk appetite.

On March 27, the Shanghai Composite Index opened lower but then moved higher, with all three major index benchmarks collectively rising. The brokerage sector showed active trading momentum; in the morning it once dipped to a new low for this round of pullback, but quickly turned red. After midday, it continued to surge further. The top-tier brokerage-focused ETF (512000) saw its on-exchange price rise by more than 1% at one point; it ultimately closed up 0.81%, with trading volume exceeding 600 million yuan. Most individual stocks finished in the green; China Galaxy and Xiangcai Co., Ltd. rose by more than 2%, while 9 stocks including Southwest Securities and CITIC Securities rose by more than 1%.

On the news front, Cheng Herong, the Chief Lawyer of the China Securities Regulatory Commission, disclosed at the Boao Forum for Asia 2026 Annual Conference during a sub-forum on “creating a favorable market environment and advocating long-term value investing” that, in 2025, the actual incremental amount of various long- and medium-term funds entering the market exceeded 1 trillion yuan. 2026 is the opening year of the “15th Five-Year Plan to 2026” (“15th Five-Year Plan” / 十五五) period. Under the dual guidance of building a financial power and deepening reforms in the capital market, the industry outlook for brokerages is expected to continue moving upward.

Looking at the situation today, the brokerage sector is in a divergence phase characterized by “earnings with high growth potential + valuations at a low level.” On one hand, the continuing, more prominent effects of high-quality development of the capital market are expected to further improve trading activity in the equity market. Businesses such as proprietary trading, brokerage, investment banking, and asset management are expected to drive continuous growth in brokerage performance.

On the other hand, valuations for the brokerage sector remain at a historic low. As of March 23, the PE valuation of the brokerage index relative to CSI 300 is only 1.12x, placing it in the 6% percentile over the past 10 years. The PB valuation of the brokerage index relative to CSI 300 is only 0.82x, placing it in the 2% percentile over the past 10 years.

Orient Securities stated that in the short term, the market is affected by geopolitical conflicts, and market risk appetite has not yet risen significantly. With the marginal weakening of the impact from overseas disruptions, market risk appetite is expected to experience a rebound and repair. The brokerage sector—which has a “safety margin of earnings growth + valuation decline”—is expected to see valuation repair, and investors are advised to pay attention to the brokerage sector’s repair rally after risk appetite rebounds.*

Haitong Securities also believes that looking ahead, the brokerage sector’s earnings stability and sustainability are relatively good. Factors suppressing capital are expected to ease, market style is likely to become more balanced under geopolitical fluctuations, and the policy support for the capital market will increase. Coupled with strong earnings and low valuations, the sector may enter a window period for valuation repair. Pay attention to strategic allocation opportunities in brokerages.*

If there’s momentum, buy brokerages! The brokerage ETF (512000) and its target funds (A share class 006098; C share class 007531) passively track the CSI All-Share Securities Company Index. With one click, they cover 49 listed brokerage stocks—an efficient investment tool for concentrating on leading brokerages while also taking into account smaller and mid-sized brokerages. The latest fund size of the brokerage ETF (512000) exceeds 35 billion yuan, with average daily trading value of more than 1.1 billion yuan within the year. It is a top-tier brokerage ETF in A-shares with prominent scale and liquidity.

Reminder: Market volatility in the near term may be relatively large; short-term percentage gains or losses do not indicate future performance. Investors should invest rationally based on their own funding situation and risk tolerance, and pay close attention to position sizing and risk management.

Data sources include Shanghai and Shenzhen stock exchanges and public information. The brokerage ETF (512000) passively tracks the CSI All-Share Securities Company Index. The index’s base date is 2007.6.29, and it was released on 2013.7.15. The annual returns of the CSI All-Share Securities Company Index in 2021–2025 were -4.95%, -27.37%, 3.04%, 27.26%, and 2.54%, respectively. The composition of index constituents is adjusted in a timely manner according to the index compilation rules, and its backtested historical performance does not predict the index’s future performance.

Institutional viewpoints source: Orient Securities 20260323 “How to view the divergence between current brokerage performance and valuation?”; Haitong Securities 20260319 “Is there a repair rally in brokerage stocks?”

ETF fund fee-related notes: When investors apply for subscriptions or redemptions of fund shares, the subscription/redemption agents may charge a commission at a standard not exceeding 0.5%. On-exchange trading fees are subject to what the securities companies actually charge, and no sales service fee will be charged. Notes on the fees of the linked funds: The Huabao CSI All-Share Securities Company ETF linked fund (A share class) subscription fee rate (front-end load) is 1000 yuan per order when the subscription amount is 2 million yuan (inclusive) or above; 0.6% when it is 1 million yuan (inclusive) to 2 million yuan; and 1% when below 1 million yuan. The redemption fee rate is 1.5% when held for less than 7 days; 0.5% when held for 7 days (inclusive) to 180 days; 0.25% when held for 180 days (inclusive) to 1 year; and 0% when held for 1 year (inclusive) or more. No sales service fee is charged. The Huabao CSI All-Share Securities Company ETF linked fund (C share class) does not charge a subscription fee; the redemption fee rate is 1.5% when held for less than 7 days and 0% when held for 7 days (inclusive) or more. The sales service fee is 0.4%.

Risk warning: The above products are issued and managed by the fund manager. Distributors do not assume responsibility for investment, payment/settlement, or risk management of the products. Investors should carefully read the fund legal documents such as the “Fund Contract,” the “Prospectus,” and the “Fund Product Prospectus” to understand the fund’s risk-return characteristics, and choose the product that matches their own risk tolerance. Past fund performance does not predict its future performance; investment in the fund involves caution! Fund sales institutions (including the fund manager’s direct selling institutions and other sales institutions) conduct risk assessments of this fund according to relevant laws and regulations. Investors should promptly pay attention to the suitability opinions issued by the fund manager. Suitability opinions from different sales institutions may not necessarily be consistent, and the risk level assessment results of the fund products issued by fund sales institutions must not be lower than the risk level assessment results made by the fund manager. Differences exist in the fund contract regarding the fund’s risk-return characteristics and risk level due to different consideration factors. Investors should understand the fund’s risk-return situation, choose fund products prudently based on their own investment objectives, time horizon, investment experience, and risk tolerance, and bear the risks themselves. The China Securities Regulatory Commission’s registration of the above funds does not constitute any substantive judgment or guarantee regarding the investment value, market prospects, or returns of the above funds. Investment in the fund involves caution.

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