The recovery trend in brokerage stocks continues amid market fluctuations. On May 7, Orient Securities saw its share price rise over 2% after disclosing a merger and reorganization plan with Shanghai Securities. However, the overall brokerage sector index retreated compared to the previous day, declining by 0.41%. Among the 50 listed brokerages, 38 fell, 4 remained unchanged, and 8 advanced. First Capital, Caitong Securities, and Orient Securities each gained more than 2%, while Pacific Securities, Tianfeng Securities, China Merchants Securities, Guotai Haitong, and Great Wall Securities also followed with increases.
In recent years, policy dividends such as the new "National Nine Articles" have continued to be released, supporting leading institutions in enhancing their core competitiveness through mergers, acquisitions, and organizational innovation. Against this backdrop, merger and acquisition activity in the securities industry has significantly increased. At the top tier, Guotai Junan has completed its absorption of Haitong Securities. Integration among regional and specialized brokerages has also accelerated noticeably: Guosen Securities received approval to acquire Wanhe Securities, Western Securities gained control of Guorong Securities, Zhejiang Securities nearly finalized its takeover of Guodu Securities, the combination of Guolian Securities and Minsheng Securities was completed, and Guosheng Financial Holding absorbed Guosheng Securities. These transactions are driving profound changes in the industry landscape.
Since 2026, the pace of brokerage mergers and integrations has accelerated markedly: Soochow Securities has initiated a strategic integration with Donghai Securities, China International Capital Corporation is progressing with its share swap absorption of Cinda Securities and Dongxing Securities, and Orient Securities recently announced a plan to merge with Shanghai Securities.
As May began, with the conclusion of annual and first-quarter earnings reports, non-bank research teams at brokerages have released summaries of the securities industry's performance for 2025 and the first quarter of 2026. Analysis indicates that non-bank chief analysts generally agree that first-quarter results for leading brokerages exceeded expectations, with return on equity surpassing recent highs, leading to continued optimism and recommendations for the sector.
Kaiyuan Securities non-bank chief analyst Gao Chao pointed out that "low valuation, better-than-expected first-quarter results, and improved growth prospects" form the core logic for his current positive view on leading brokerages. Market concerns over capital pressures and refinancing risks in the brokerage sector are already fully reflected in valuations, which remain at historical lows, while ROE continues to improve. This divergence between fundamentals and valuation is unlikely to persist long-term.
Gao Chao's research report shows that the average annualized weighted ROE for the "four leading brokerages" (CITIC Securities, Huatai Securities, GF Securities, and CICC) reached 12.7% in the first quarter of 2026, an increase of 4.2 percentage points year-on-year, exceeding the peak level seen in 2021. Notably, broad-based improvement in fee-based income provided key support for the new ROE highs.
CITIC Securities financial industry chief analyst Tian Liang shares a similar view, stating that leading brokerages further consolidated their advantages in the first quarter of 2026. Their adjusted ROE reached 2.35%, profit concentration hit 74.7%, and the year-on-year increase in ROE stands at a historically high level. He highlighted the rise of international business, characterized by "high leverage and high ROE," as a potential new growth engine for top brokerages to navigate domestic cycles.
Tian Liang forecasts that the securities industry's ROE in 2026 could reach near the 90th percentile of the past decade, while current price-to-earnings and price-to-book ratios are below the 20th percentile, underscoring attractive valuation opportunities.
Founder Securities financial chief analyst Xu Yishan advises investors to seize investment opportunities arising from the sector's ongoing fundamental improvements. As of the close on May 6, the sector's static PE and PB valuations were at the 5th and 16th percentiles of the past decade, respectively. She suggests focusing on the investment potential created by the disconnect between improving fundamentals and recent price performance.
In terms of stock selection, Xu Yishan recommends focusing on leading brokerages with high ROE and low PB ratios, local state-owned brokerages with low PB and strong growth ambitions, as well as targets with high profitability and valuation elasticity.