According to a research report released by China Securities Co., Ltd. (ASX: 601066), since the second half of 2026, multiple listed brokerages have intensively launched or advanced share buybacks, with significant shareholders increasing their holdings in tandem.

This round of buybacks is dominated by small and medium-sized brokerages, with the proportion of cancellation-type buybacks rising significantly and the initiators becoming more diversified.

The direct motivation is the mismatch between strong first-half performance and low sector valuations, prompting industrial capital to step in with its own funds to actively correct the discrepancy; on the policy side, the new "Nine National Articles" encourage buyback cancellations, and market value management guidelines continue to provide direction, pushing cancellation-type buybacks toward normalization.

Cancellation-type buybacks permanently reduce total share capital, enhance earnings per share and return on net assets, and carry no subsequent selling pressure from treasury shares, driving brokerage market value management from short-term stabilization toward long-term shareholder returns, which is long-term positive for optimizing the sector's shareholder return system.

Event: Since the second half of 2026, multiple listed brokerages have intensively launched or advanced share buybacks.

The main views of China Securities Co., Ltd. (ASX: 601066) are as follows: This round of brokerage buybacks and holdings increases shows the following characteristics: First, small and medium-sized brokerages are the main participants. Mid-sized institutions such as Guolian Minsheng, Changjiang Securities, Huaan Securities, Sinolink Securities, Hongta Securities, and Zhongtai Securities have moved intensively, while top-tier brokerages have acted relatively cautiously. The logic is that buybacks directly consume net capital, and net capital is the regulatory bottom line for core businesses such as margin trading and proprietary trading. Small and medium-sized brokerages currently have limited willingness to expand business and relatively ample net capital, so they meet the conditions for implementation. Second, the proportion of cancellation-type buybacks has risen significantly. In the past, buybacks were mostly for market value maintenance and equity incentives, but in this round many companies have explicitly stated that shares will be used for cancellation and reduction of registered capital, and some companies have also agreed that repurchased shares unused within three years will be cancelled according to procedures. Third, the initiators are becoming more diversified. Controlling shareholder proposals, chairman-initiated plans, and simultaneous increases in holdings by significant shareholders mean that major shareholders and management share a common recognition of the company's valuation, with buybacks and holdings increases forming a combined force.

So why have brokerages recently been buying back shares or increasing holdings intensively? The direct surface-level motivation is the mismatch between high performance growth and depressed valuations. First-half performance was generally forecast to improve, yet sector valuations remain at historical lows. Industrial capital entering with its own funds is an active correction of this mismatch; continued policy guidance, along with tools such as relending for buybacks and holdings increases, has also provided low-cost funding support. The root cause lies in the dual resonance of institutions and interests. At the policy level, the new "Nine National Articles" wrote buyback cancellation into top-level design for the first time, clearly encouraging listed companies to repurchase shares and cancel them according to law; since 2024, policies such as the CSRC's market value management guidelines have further encouraged cancellation-type buybacks, while lower thresholds and the removal of window periods in buyback rules have paved the way for them to move from occasional actions to normal practice. At the shareholder return level, repurchasing and cancelling shares with own funds at low valuations is equivalent to recovering equity at a low price, which is more friendly to shareholders. In this round of brokerage buybacks, many companies have explicitly used shares for cancellation and reduction of registered capital.

Its impact mainly has three aspects: First, it permanently reduces total share capital, and under unchanged earnings it enhances earnings per share and net assets per share, passively raising return on net assets, which is a genuine return of real money to all shareholders. Second, cancelled shares permanently exit circulation, so there is no selling pressure from treasury shares being sold later, which helps sustainably support the valuation foundation. Third, it pushes the brokerage industry's market value management approach from short-term stabilization and support toward long-term shareholder returns, aligning with the investor-oriented direction. However, it should also be viewed rationally: the improvement in metrics from cancellation-type buybacks is built on the basis of stable earnings. If fundamentals lack support, limited-scale share reduction alone will be difficult to form a sustained valuation floor.

Risk warning: Uncertainty of market price fluctuations. Capital market prices are affected by many factors, including macroeconomic fluctuations, changes in the global economic situation, and fluctuations in investor sentiment, all of which may trigger stock price changes or affect the valuations of institutions such as brokerages and insurance companies. The performance of the non-bank financial industry is greatly affected by market prices and trading volume. Uncertainty in corporate earnings forecasts: The earnings of the securities and insurance industries are affected by multiple factors, and the report's forecasts for industry valuation and performance contain certain uncertainty. In addition, intensified competition within the industry may also cause deviations in forecast results. Technological updating and iteration: The rapid development of emerging technologies requires financial institutions to continuously follow up and adapt to the pace of technological change. However, accelerating technological updating and iteration also brings high research and development investment and talent training costs, which may increase the operating costs of brokerages and insurance companies. At the same time, the outbreak of technological innovation has a certain degree of uncertainty.