The Zhitong Finance App learned that J.P. Morgan Chase released a research report saying that in the face of recent poor performance, the bank is gradually becoming more positive and policy support for the brokerage sector; in the short term, A-share brokerage firms are expected to continue to outperform their H-share peers, while the medium to long term believes that H share brokers are becoming more attractive after adjusted risk and return, and it is the first choice for the Chinese brokerage sector.
According to the bank, China's A-share and H-share brokerage firms outperformed the Shanghai and Shenzhen 300 and Hang Seng Index by 0.6 percentage points and 6.6 percentage points respectively from November 3 to 6, which is generally in line with the bank's previous profit take-back judgement after the rebound on November 2.
The bank pointed out that policy support covers the strengthening of ETF purchases by the national team, the strengthening of capital market support tools for the People's Bank/China Securities Regulatory Commission, active participation of financial institutions, and numerous promises by senior officials to maintain market stability. The People's Bank of China carried out the third round of SFISF operations on November 3. The scale reached 100 billion yuan, and the winning bid interest rate was 10 basis points, and the operating scale was 50 billion yuan and 55 billion yuan respectively in October 2024 and January 2025; more than 20 brokerage firms received quotas, and CICC Securities (06030), Cathay Pacific Haitong (02611), China Merchants Securities (06099), and China Galaxy (06881) have disclosed that they have begun using quotas to buy A shares, reflecting faster execution than the previous two rounds.
Investor sentiment showed early signs of improvement. The average daily turnover of A-shares exceeded RMB 2 trillion on November 4 and 5, and the financing balance also showed signs of stabilizing. After recent adjustments, the pressure to take back profits should ease, and valuations are still not expensive. A-share and H-share brokerage forecasts for 2026 are about 0.9 times/0.7 times, respectively.
Within the scope of coverage, CICC appears to be the biggest beneficiary. It has disclosed that it received a maximum amount of 16.3 billion yuan from SFISF, which is estimated to be a low unit percentage increase in profits.