As a leader in the bull market, the brokerage sector is undoubtedly one of the most focused areas in this wave of bull market.
Starting from &#34;924&#34; until the holiday, A-share brokerage stocks have been skyrocketing. On September 30th, except for Guotai Junan and Haitong Securities which were suspended, all other stocks closed at the daily limit up! In the recent 5 days of A-share trading, internet brokerages and small brokerages have seen the highest gains, with Compass accumulating a surge of 109.15% and East Money soaring by 89.19%.
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Obviously, if it weren't for the daily limit restrictions, the surge ceiling for these brokerage stocks would undoubtedly be even higher.
During the A-share holiday, Hong Kong brokerage firms have been aggressively outperforming. Since the outbreak of the bull market on &#34;924&#34;, the Hong Kong brokerage index has skyrocketed from 400 points to 888 points, a 1.2-fold increase! From October 2nd to 4th, in just 3 trading days, it has surged by as much as 53%!
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It can now be almost certain that after the holiday, A-share market opens, brokerage stocks are likely to see another wave of collective daily limit up.
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At the individual stock level of Hong Kong brokerage firms, in just the past 5 days, as many as 16 stocks have doubled, with Shenwan Hongyuan Hong Kong and First Shanghai soaring by 6.3 times and 2.9 times respectively.
Even more astonishing is that the giant brokerage firm with a market value of hundreds of billions, CMSC Hong Kong, has already surged by 1.21 times in just the past 3 days of outperformance! This is a super giant with a market value of hundreds of billions, doubling in such a short period of time, indicating the scale of incremental funds and the extent of bullish sentiment behind it.
CMSC is both A+H shares, and with its H shares surging so terrifyingly in the past 3 days, it is self-evident how it will perform when its A shares return from the holiday.
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Similarly, Zhongzhou Securities (A-share Zhongyuan Securities) has surged by 76.4%, Guolian Securities, Hongye Futures, Shenwan Hongyuan, CITIC Securities have all surged by over 60%.
Based on a 10% daily limit up, it will be at least a 5-board start!
Looking back at the past few bull market cycles, brokerage firms have always been at the forefront in terms of significant gains.
According to statistics, during the bull market from 2005 to 2007 (June 6, 2005 to October 16, 2007), the securities industry as a whole surged by 2073%, with many stocks even seeing gains of several tens of times
During the bull market from 2014 to 2015 (March 12, 2014 to June 12, 2015), the market cycle lasted less than a year. The Shanghai Composite Index rose by 1.5 times, with most brokerage stocks more than doubling. Western Securities topped the list with a cumulative increase of 650%, while other leading brokerage firms such as Everbright Securities, Huatai Securities, Changjiang Securities, Industrial Securities, and Shanxi Securities also saw around a 3.5-fold increase.
By comparison, we can easily understand that the current bull market cycle, whether in terms of index or individual stock gains, is still in the early stages.
Currently, only one brokerage stock in the A-share market has achieved a doubling of gains, which is clearly far from enough.
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This time, compared to previous bull market cycles, there are significant differences in both the fundamentals and technical aspects of brokerage stocks. This has raised higher expectations for the current brokerage stock market.
In the first three quarters of this year, the brokerage industry was going through one of its darkest periods - IPOs were almost frozen, margin financing and securities lending business were nearing freezing point (securities lending business had been suspended), especially in trading activities. The continuous decline in the market for several months led to bleak trading sentiment, with trading volume continuously shrinking. In July and August, the average daily stock trading volume was 655.9 billion yuan and 597.2 billion yuan respectively, down by -22% and -28% year-on-year. By September, a daily trading volume of 500 billion yuan became the norm, and even liquidating and closing accounts became a helpless joke for countless investors.
In terms of brokerage performance, data shows that in the first half of 2024, the total operating income of listed brokerages reached 235 billion yuan, down by 13% year-on-year, and the net profit attributable to shareholders was 64 billion yuan, down by 22% year-on-year. The top ten large brokerages collectively achieved an operating income of 141.3 billion yuan, down by 14% year-on-year, and a net profit of 42.6 billion yuan, down by 20% year-on-year. The industry as a whole faced similar challenges.
Among them, the net income of various businesses of large brokerages declined year-on-year. Specifically, investment banking and net interest income saw significant declines, while brokerage and asset management businesses had relatively smaller declines, and investment income showed more differentiation year-on-year. In the first half of 2024, the net income of large brokerages from investment banking, asset management, brokerage, net interest, and investment banking decreased by 6%, 7%, 13%, 38%, and 46% respectively.
Due to poor market conditions and performance, brokerages were the only sector in the major financial industry that couldn't lift its head at that time. While banks and insurance companies surged by over 50% in the first half of the year, brokerages fell instead of rising. Even with the government's intentional push for brokerage restructuring and support for growth, brokerage stocks only experienced a short-lived rally.
In early July, the overall P/E ratio of A-share brokerages fell below 20 times, with the P/E ratio of leading brokerages at only over 10 times. The overall P/B ratio of brokerages also dropped to a rare low of 1.03, approaching the point of breaking below book value.
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Including China Galaxy, GF Securities, Guotai Junan, Huatai Securities, etc., the PB ratios once dropped to as low as 0.6-0.8 times, a situation that had only occurred at the end of 2018 in the past 10 years.
But now, with the &#34;924&#34; super policy stimulating the stock market and initiating an epic bull market, everything has changed.
From the darkest moment, securities firms have directly become the focus of the market, being crazily pursued by all investors.
The daily trading volume of A-shares has also surged from over 500 billion to 26.1 trillion, more than quadrupling in an instant!
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At the same time, it can be seen that the policy level also strongly encourages listed companies to restructure, repurchase stocks through financing/pledging, strongly guides various large-scale national teams, public and private equity funds, long-term funds to enter the market, and even in recent days, we have seen an acceleration in IPOs. All of these are direct benefits to various aspects of the securities business, which will directly lead to huge positive growth in the performance of securities firms.
Not to forget, securities firms themselves also have proprietary and investment banking businesses, and the returns on assets they allocate will inevitably soar with this round of super bull market.
All of this will continuously strengthen the performance and market value growth of securities firms.
In other words, securities firms that are oversold and extremely cheap, encountering the unprecedentedly strong stimulus policy of the super bull market cycle, and then with all funds in the market starting from underweight to crazily overweight, the super bull market trend of securities firms is destined to form.
It can also be said that this wave of securities market trend will be more rapid and aggressive than any previous one, even though their eventual increase may not surpass the performance of 2007/2015, it is certain to be impressive enough.
Let's wait and see for this wave of super bull market together!

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In the current bull market, the brokerage sector has performed outstandingly, with A-share brokerage stocks hitting the daily limit on September 30th. Internet brokerages and small brokerages have shown significant gains. The Hong Kong brokerage index has risen 1.2 times since the outbreak of the "924" bull market, with China Merchants Securities' Hong Kong stocks soaring 121% in just 3 days. It is expected that after the A-share market opens, brokerage stocks will see a collective daily limit surge. Historical data shows that brokerages typically perform well in bull markets

Securities firms are going crazy! CMS Hong Kong stocks have already surged 121%!