The brokerage sector has recently seen a pullback after a strong rally, but underlying fundamentals and emerging catalysts suggest the broader trend remains positive. As innovation reshapes the financial landscape, brokerages are not only benefiting from improving market conditions but also gaining new growth runways through strategic advancements—particularly in virtual asset services.
👉 Discover how the latest financial innovations are transforming brokerage opportunities today.
Market Pullback Masks Underlying Strength
On June 26, the Wind Securities Index declined by 1.71%, with only six of its 52 constituent stocks ending the day in positive territory—namely Guosheng JinKong, Tianfeng Securities, Xiangcai Shares, and Guohai Securities. Notably, previously high-flying stocks like Guotai Haima, East Money, and Guosen Securities dropped 4.29%, 3.62%, and 2.19% respectively.
Despite this short-term correction, the broader picture is one of resilience and momentum. Since the beginning of June, the Wind Securities Index has surged 11.41%—ranking first among all 67 China industry indices tracked by Wind as of June 25. This performance underscores growing investor confidence and sector-wide reactivation.
Drivers Behind Sector Resurgence
Analysts point to a confluence of favorable factors fueling renewed interest in brokerage stocks.
First, policy tailwinds are expanding operational frontiers. The recent approval for Guotai Junan International to offer virtual asset trading services marks a pivotal moment—not just for the firm, but for the entire sector. It signals regulatory openness to innovation and opens up new revenue streams tied to digital assets.
Second, secondary market activity remains robust. Sustained high daily trading volumes on the Shanghai and Shenzhen exchanges directly benefit brokerage firms through commission income and margin financing interest—two core components of their business models.
Third, valuations remain attractive. With price-to-book (PB) and price-to-earnings (TTM) ratios at 1.44x and 20.75x respectively—sitting around the 58th and 52nd percentiles over the past five years—the sector offers a compelling "low valuation + high beta" profile.
“Market concentration is rising,” notes Sui Dong, wealth researcher at PEP Network. “Investor expectations around M&A activity are heating up, further enhancing the sector’s allocation appeal.”
Macroeconomic Tailwinds Support Rotation
Hu Mohan, fund manager at Mingze Investment, highlights another critical driver: declining discount rates.
As risk-free yields fall, the opportunity cost of equity investment decreases, prompting capital rotation into higher-yielding segments like financials. Simultaneously, capital market reforms focused on investor returns have reduced systemic risk perception, encouraging broader market participation.
Post-Lujiazui Forum policy rollouts have also broadened brokerages’ revenue channels—from wealth management to investment banking and fintech integration. Meanwhile, the convergence of artificial intelligence with financial services is creating new operational efficiencies and customer engagement models.
👉 See how next-generation financial platforms are redefining investment strategies.
Performance Outlook: Strong Fundamentals Ahead
Looking forward, earnings visibility appears bright.
According to Kaiyuan Securities’ non-bank financial team, brokerage mid-year reports for 2025 are expected to reflect strong performance, with estimated year-on-year profit growth nearing 50%—excluding one-off gains from Guotai Haima in Q1.
Mutual fund positioning data reinforces this bullish case: as of Q1 2025, active equity funds held just 0.42% in brokerages and 0.58% in insurers—significantly underweight compared to their respective weights in the CSI 300 index (6.66% and 3.88%). This under-allocation suggests substantial room for institutional rebalancing, which could drive sustained inflows.
Core keywords such as brokerage stocks, valuation recovery, virtual asset trading, fintech innovation, market activity, regulatory approval, M&A consolidation, and digital finance infrastructure are increasingly central to investor narratives.
Strategic Investment Themes to Watch
Analysts recommend focusing on three key investment themes:
- Large-cap brokers with strong retail franchises and low valuations – These firms combine scale, stability, and upside potential.
- High-beta fintech plays – Companies leveraging technology for trading efficiency and user experience enhancement.
- Firms with significant exposure to Hong Kong IPOs and overseas markets – Particularly those poised to benefit from increased cross-border capital flows.
Sui Dong emphasizes that a virtuous cycle between valuation recovery and earnings growth is now taking shape. With mid-year results approaching, multiple brokerages are expected to deliver strong numbers—especially leading players with diversified revenue streams and solid risk management frameworks.
Long-Term Vision: Building Global-Ready Financial Champions
From a structural standpoint, industry consolidation presents a major opportunity.
Hu Mohan believes that the integration of smaller brokers into larger entities can unlock synergies in funding, technology, and operations. Such mergers reduce redundant competition, lower costs, and improve profitability—while enabling scale necessary to compete globally.
“Developing ‘aircraft carrier’-scale brokerages isn’t just about domestic dominance,” he says. “It’s essential for navigating international financial competition and safeguarding national financial interests.”
This transformation aligns with broader state goals of strengthening China’s capital markets and enhancing global influence through financial innovation.
Innovation Redefining Industry Boundaries
Recent developments signal a shift beyond traditional brokerage models.
As noted by Dongwu Securities analysts Sun Ting and Wu Xinshu, Guotai Junan’s virtual asset license proves Chinese brokerages can operate compliantly in the digital asset space. This paves the way for other major players like CITIC Securities, CICC, and China Merchants Securities International to follow suit.
The future competitive edge will lie in building cross-border digital financial infrastructure, anchored on two pillars:
- Clearing Hub: Using stablecoins to streamline cross-border payments and challenge legacy systems like SWIFT.
- Securitization Engine: Leading tokenized issuance and management of real-world assets such as bonds and funds.
These capabilities won’t just diversify income—they’ll allow brokerages to expand balance sheets through stablecoin reserve holdings, enabling both light-capital (advisory, trading) and heavy-capital (market-making, lending) activities to grow in tandem.
👉 Explore how digital finance infrastructure is shaping the future of global investing.
Risks to Monitor
While the outlook is positive, investors should remain mindful of risks:
- Market volatility impacting proprietary trading and margin lending profits
- Regulatory uncertainty around fintech and crypto-related services
- Intensifying competition compressing margins
A dynamic approach to portfolio management—aligned with policy shifts and macro trends—is advisable.
Frequently Asked Questions (FAQ)
Q: Why are brokerage stocks rebounding now?
A: A combination of policy support (e.g., virtual asset licenses), strong market turnover, improving earnings outlooks, and low historical valuations are driving renewed investor interest.
Q: How do virtual asset licenses impact traditional brokerages?
A: They open new revenue streams, enhance cross-border capabilities via stablecoin settlements, and position brokerages as leaders in tokenized asset issuance—transforming them into digital financial infrastructure providers.
Q: Are mid-sized brokerages good investment candidates?
A: Yes, especially those with merger potential. Consolidation can lead to cost savings, improved efficiency, and better access to capital and technology—boosting long-term profitability.
Q: What role does fintech play in brokerage growth?
A: Fintech enables automation, personalized services, AI-driven analytics, and seamless trading platforms—improving customer retention and operational scalability.
Q: Is the current rally sustainable?
A: With underweight institutional positioning and improving fundamentals, there is room for continued gains—provided market conditions remain stable and policy momentum continues.
Q: How might AI affect brokerage business models?
A: AI enhances risk assessment, fraud detection, client service automation, and algorithmic trading—reducing costs while improving decision-making speed and accuracy across departments.