Open Source Securities: Optimistic about the Spring Offensive in the Securities Sector

CryptocurrencySniper · 2026-03-06T01:31:43+00:00

Open-source Securities is optimistic about the spring market for the brokerage sector, believing that sustained high profitability, low valuations, and long-term stagnation will drive increased market activity. It is expected that by 2026, the net profit of brokerages will see significant growth, and several undervalued leading brokerage firms are recommended as investment opportunities.

CryptocurrencySniper

2026-03-06 01:31:43

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Open Source Securities points out that the high profitability and prosperity continue, combined with low valuations and long-term stagnation, making the brokerage sector favorable for a spring rally. Since 2025, the stagnation has lasted about a year, mainly due to the significant rise during the “9.24” period in 2024, restrictions on capital flow, and concerns over fee reductions. In early 2026, market activity is expected to expand, with wealth management and overseas businesses likely becoming key drivers for the sector’s profit growth. Valuations are gradually falling to historic lows, and public fund holdings are at historic lows, supporting a bullish outlook for the brokerage sector in the spring.

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Deposit Migration, Benefiting Both Non-Banking Liabilities and Assets — Non-Banking Financial Industry Investment Strategy for Spring 2026 - 20260305

Insurance: Dual-driven by liabilities and assets, with prominent equity flexibility

Liabilities: Fully benefiting from deposit migration, dividend insurance shows high cost-effectiveness under bullish market expectations, coupled with a low base, leading to good growth in new individual insurance policies at the start of 2026; bancassurance channels are expected to continue high growth seen in 2025. The proportion of dividend insurance continues to rise, and the decline in rigid liability costs benefits insurers’ valuation uplift.

Assets: Stabilization of long-term interest rates and a favorable equity market support net assets and insurer profitability.

Around the Spring Festival holiday, adjustments in insurance H-shares and A-shares were noticeable. Besides the high base effect from the early 2026 rally driven by the opening red and bullish expectations (New Year’s start + bull market outlook), concerns about AI impacts (potential substitution in sales channels like insurance intermediaries; potential impacts on white-collar employment and the economy) also exert negative pressure on the sector. We believe AI can improve operational efficiency for traditional financial institutions, and the medium-term positive trend in liabilities and assets remains unchanged. The average PEV valuation of listed insurers in A-shares has fallen to 0.78 times, offering good short-term risk-reward. From March to April, performance catalysts are expected to emerge gradually in the insurance and brokerage sectors, making it a good time to position. Recommended stocks include China Pacific Insurance, China Life H-shares, and Ping An Insurance.

Brokerage: Prosperity expected to continue, valuations still low, strategic increase in holdings recommended

Fundamentals are expected to remain strong, with ROE likely to continue rising in 2026. Market activity expanded significantly at the start of 2026, with high growth in new public fund issuance, and brokerage and wealth management businesses are expected to remain highly prosperous. Leading brokerages’ overseas expansion is also promising. We forecast that net profits of listed brokerages will grow by +52.3%/+29.6% year-over-year in 2025-2026 (excluding large non-recurring gains and losses), with weighted ROE reaching 10% in 2026.

The high profitability and prosperity continue, combined with low valuations and long-term stagnation, favoring a spring rally in the brokerage sector. Since 2025, stagnation has lasted about a year, mainly due to the significant rise during the “9.24” period in 2024, restrictions on capital flow, and concerns over fee reductions. In early 2026, market activity is expected to expand, with wealth management and overseas businesses likely becoming key drivers for profit growth. Valuations are gradually falling to historic lows, and public fund holdings are at historic lows, supporting a bullish outlook for the sector in the spring.

Three main investment themes are recommended: undervalued stocks with high profit contributions from wealth management, such as Huatai Securities and GF Securities; leading undervalued brokerages like Guotai Haitong, CICC H-shares, and CITIC Securities; and retail-focused firms like Guoxin Securities, benefiting from stocks like Tonghuashun.

(Source: First Financial)

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