GLMS SEC has released a research report suggesting that the non-bank financial sector is likely to see a recovery in its valuation. This outlook is based on the expectation that the sector's fundamentals will continue to improve, supported by favorable policies aimed at stabilizing economic growth, which should boost sentiment in the equity market. While short-term shifts in market style may exert some pressure on sector valuations, the anticipated improvement in fundamentals and a potential rotation towards lower-valued segments are seen as key drivers for a valuation rebound, presenting investment opportunities.
Key Points from the Report:
Securities Brokerages: Trading volumes are expected to underpin year-on-year earnings growth for the first half of 2026. The significant year-to-date improvement in trading activity, coupled with a recovery in the equity market during the second quarter, is likely to drive a rebound in brokerage performance. The average daily stock and fund transaction value for the first five months of 2026 reached 3.2 trillion yuan, representing a 93% year-on-year increase. Brokerage commission income for H1 2026 is projected to grow by 59% year-on-year. With the equity market recovery pushing major indices higher, investment income for the brokerage sector in H1 2026 is forecast to rise by 22%. In terms of investment banking, IPO fundraising volume has surged 98.3% year-on-year, while follow-on offerings have declined by 50.5%, and bond underwriting volume has increased by 15.1%. Overall, investment banking revenue for the sector in H1 2026 is expected to grow by 43%.
Insurance: The liability side is expected to maintain its positive trajectory, while the asset side shows marginal improvement. Strong household savings demand, regulatory guidance to lower the assumed interest rate cap for participating policies, and the deepening implementation of channel compliance measures are projected to support continued growth in new business value for life insurance in H1 2026. For property and casualty insurance, the combined ratio is anticipated to improve further, benefiting from compliance measures in certain non-auto lines and insurers' initiatives to reduce costs and enhance efficiency. On the asset side, the equity market's rise in Q2 2026 is expected to bolster investment returns for insurers, contributing to better overall performance. However, differences in earnings bases and investment strategies among individual companies are likely to lead to a divergence in net profit growth rates.
Leasing: Performance among general equipment lessors is expected to be relatively stable, while industrial leasing companies may see stronger results. For the general equipment leasing segment, total industry placement volume for the first five months of 2026 was 1.59 trillion yuan, down 5.43% year-on-year. Against this backdrop of negative growth, performance within the industry is expected to become more differentiated. Financial leasing companies with robust asset placement are likely to perform better. In aircraft leasing, the supply-demand gap continues to widen, indicating sustained industry growth. Combined deliveries from Boeing and Airbus in May 2026 reached 141 units, the highest May figure since 2019. New orders for the month totaled 406 aircraft, with the overall backlog rising to 16,018 units. Lessors positioned for earlier deliveries are expected to outperform. For ship leasing, charter rates for different vessel types show significant divergence, but overall industry conditions remain favorable. The Clarksons Index in May 2026 stood at $39,162 per day, down slightly month-on-month but still significantly higher than the level seen in the same period of 2025.
Risk Factors: The report highlights several potential risks, including a slower-than-expected market recovery, increased volatility in equity markets, a decline in long-term interest rates, a deterioration in asset quality, shifts in regulatory policy, calculation errors, falling lease rates, and geopolitical uncertainties.