"Ten-year outlook for the CICC securities industry: the demand side welcomes development opportunities, focus on business transformation and upgrading"

CICC released a research report stating that the China Securities Regulatory Commission proposed that by 2035, there should be 2 to 3 investment banks and investment institutions with international competitiveness and market leadership. Over the past thirty years, the Chinese capital market has experienced ups and downs, with the overall scale ranking among the top in the world. The functions of financing, trading, and asset allocation have continuously improved and provided support for the development of the Chinese securities industry. Looking ahead, the capital market is expected to play a greater role in promoting technological innovation and driving high-quality development. Chinese securities firms need to make efforts and strive towards the goal of becoming first-class investment banks. Key points of CICC: Opportunities brought by three types of demands: highlight functional performance and provide one-stop services with customers at the center. Looking ahead for the next ten years: 1) Chinese companies accelerating transformation and upgrading are expected to grow into more global industry leaders and large multinational corporations; 2) Deepening reform and opening of the Chinese capital market is expected to attract more various domestic and foreign investment institutions represented by long-term funds; 3) Chinese households' continuous wealth accumulation is expected to generate more complex asset allocation needs. In the new era, the financial needs of enterprises, institutions, and residents are becoming more diverse and complex. Top Chinese securities firms are expected to seize a key opportunity period for a major expansion, wherein comprehensive securities firms can establish a long-term competitive barrier through advanced institutional mechanisms and effective internal collaboration by achieving "an investment bank brand externally and a customer account internally." Three major business transformation and upgrades: do difficult yet correct things, lay out a forward-looking plan to grab higher market share. The low threshold and homogeneity of traditional licensing businesses have led to relative industry dispersion. However, in emerging complex fields like the Sci-tech Innovation Board IPOs, derivatives, buy-side consulting, and internationalization, a certain Matthew effect has emerged. Directing pilot innovative businesses under regulatory support, efficiently meeting more diverse customer demands in a complex market environment, and the inherent requirements of large-scale operation and industry consolidation under the trend of fee reduction will drive an increase in industry concentration. In this context, top securities firms can iterate and upgrade their three major businesses: 1) In the investment banking business, strong players remain strong in the investment + investment + research linkage model. Opportunities in areas such as industry chain M&A restructuring, overseas listings, specialized development, panda bond issuances, and foreign investment opportunities in China are being nurtured; 2) Capital markets business (equity and fixed income) can serve customer investment allocation and risk management across markets, sites, and regions through the utilization of a global integrated trading platform and balance sheet. If there is moderate relaxation in product creation and leverage areas, service capabilities will be even stronger; 3) Wealth management will move towards a buyer-centric model core, achieving long-term asset inflows through consulting, allocation, and product portfolio combinations. Generally, faster growth in cross-border/international, wealth management, and off-exchange product areas can be achieved. Three competitive misalignment modes: identify a clear strategic position and build one's own first-class through long-term cultivation. Currently, top Chinese securities firms still have certain gaps compared to international first-class investment banks in terms of basic capabilities in talent, capital, and technology, apparent quality and efficiency in terms of scale, business system, and risk resistance, as well as macro functional performance. Overall, the bank predicts that the industry will present a trend of comprehensive and differentiated development in the future. Comprehensive top securities firms in China need to comprehensively enhance overall competitiveness, strengthen internal ecological synergy, and build international influence (benchmarking against Goldman Sachs / Morgan Stanley); while boutique securities firms with a focus on wealth / asset management (benchmarking against Jiaxin Wealth Management / BlackRock / Blackstone) and internet securities firms with strengths in trading experience / technology (benchmarking against Interactive Brokers / Robinhood) will grow into leading players in their vertical fields through business focus. Risk warning: Economic growth lower than expected, severe market fluctuations, regulatory policies exceeding expectations.