Open source securities: The profit effect is expected to further catalyze capital and continue to strategically increase non-banking positions.

Open source securities released a research report stating that the Shanghai Composite Index continues to rise, and the money-making effect is expected to further catalyze the inflow of individual and institutional funds. The potential space for residents to allocate equity assets such as stocks and funds is still large. It continues to be optimistic about the strategic increase in non-bank financial sector allocations under the slow bull market launch, considering the continuous improvement of fundamentals. Currently, the valuation of traditional securities firms and insurance sectors is still at a low level. Attention should be paid to subsequent trading volume, interim reports, and policy catalysis. The main points of open source securities are as follows: Securities: The implementation of the new classification evaluation system for securities companies leads to intensive and differentiated development for small and medium-sized institutions. (1) The average daily turnover of equity funds this week is 3.01 trillion, a% increase from the previous week. As of August 22, the cumulative average daily turnover of equity funds in 2025 is 1.75 trillion, an increase of% year-on-year. (2) On August 22, the China Securities Regulatory Commission revised and formally implemented the "Regulations on Classification Evaluation of Securities Companies." This regulation has been modified slightly compared to the draft version, meeting the expectations of the industry. The new regulation cancels the ranking based on total operating income, increases the emphasis on ROE, and lowers the threshold for adding points for ROE, brokerage, investment banking, and asset management from the top 20 to the top 30. The directive weakens the scale orientation and guides the industry towards intensive development and differentiated development for small and medium-sized institutions. Additionally, new bonus items include the proportion of equity asset allocation for proprietary asset management, the absolute ranking of equity asset allocation scale, the proportion of equity assets in asset management products, the number of equity funds sold, and the scale of fund advisory services. (3) Guosen announced on August 22 that the China Securities Regulatory Commission approved Guosen to become a major shareholder of Wanhe Securities Co., Ltd. (4) The market trading activity continues to rise, with the expansion of margin trading, increased equity investments, and a prosperous overseas business expected to lead to better than expected performance for securities firms. Investment banking, derivatives, public offering, and other businesses are expected to continue to improve, with valuations still at low levels and significant under-allocation by institutions. The securities sector continues to be favored for investment opportunities. Attention should be paid to trading volume, interim reports, and policy catalysts. Three main recommendations are: Guosen, a retail-focused company; top securities firms with strong overseas businesses and HKEX; and the financial technology sector. Insurance: Insurance funds continued to slightly increase their allocation to equities in the second quarter, with surveys showing that stocks are the preferred asset for the second half of the year. (1) In recent days, the China Insurance Asset Management Association released the results of a survey on investor confidence in the insurance industry for the second half of 2025. Insurance institutions have shown a significant increase in confidence in the A-share and bond markets in the second half of the year. In terms of asset allocation preferences, stocks are the preferred investment asset for Chinese insurance institutions in the second half of the year, followed by bonds and securities investment funds. In terms of investment areas, insurance institutions in the second half of the year are mainly focusing on investment opportunities in artificial intelligence, dividend assets, new quality productivity, high dividends, high stock dividends, and innovative pharmaceuticals. (2) On August 15, the China Banking and Insurance Regulatory Commission disclosed the utilization of insurance funds in the second quarter. By the end of June, the balance of insurance fund utilization was 36.23 trillion, an increase of 8.9% since the beginning of the year. In terms of structure, insurance funds continue to increase their allocation to stocks and bonds, while reducing their allocation to bank deposits, non-standard assets, and funds. At the end of June, insurance companies had a total of 4.73 trillion in stocks and funds, accounting for 13.5%, an increase of 0.2% from the end of the first quarter and 0.8% from the beginning of the year. The scale of stocks and funds increased by 360.4 billion and 261.8 billion in the first and second quarters respectively. (3) Long-term interest rates are stable, alleviating pressure on net assets, while equity assets are boosting expectations for asset yield rates. The cost of liabilities is easing, and the spread of insurance companies is expected to continue to improve in the medium to long term, leading to an improvement in the central ROE of insurance companies. It is optimistic about the restoration of PB valuation and recommends undervalued companies such as China Pacific Insurance and Ping An Insurance. Recommended stock portfolio: Guosen (002736.SZ), Orient (600958.SH), China Pacific Insurance (601601.SH), Ping An Insurance (601318.SH), Jiangsu Financial Leasing (600901.SH), HKEX (00388), East Money Information (300059.SZ), Guotai Haitong (601211.SH), Caitong (601108.SH), Beijing Compass Technology Development (300803.SZ). Beneficiary stock portfolio: CICC (03908), Hithink RoyalFlush Information Network (300059.SZ), JF SMARTINVEST09636, New China Life Insurance (601336.SH). Risk warnings: Market volatility may lead to fluctuations in investment returns; Insufficient performance on the liability side of insurance companies.