Central China: The short-term trend of February's securities firms still remains weak, and if valuations continue to decline further, it may still be a good opportunity for investment.

Central China released a research report stating that in February, the securities index fell at the beginning of the month in resonance with various equity indexes and reached a new low in adjustment, approaching the low point in early December last year. It then rebounded, but the sustainability was limited. Before the Spring Festival holiday, it once again tested the low point at the beginning of the month. The overall volatility remained in a converging state, and the short-term pattern continued to be weak, with the average P/B ratio of the sector fluctuating within a narrow range of 1.40-1.44 times. Currently, the securities sector is still running weakly, and whether it can effectively strengthen in the future depends on the resonance between industry fundamentals and policies. The certainty of significant growth in the first quarter operating performance of listed securities companies is relatively strong. If the valuation of the securities sector falls below 1.3 times P/B in the future, it will still be a good opportunity to invest, so it is recommended to actively pay attention to policy, market conditions, and the securities sector. It is suggested to focus on leading listed securities companies with prominent wealth management businesses, individual stock valuations significantly lower than the sector's average valuations, as well as medium and small listed securities companies that gradually have differentiated competitive advantages. Key points from Central China: Review of the securities sector market in January 2026: The securities index attempted to strengthen in January but ended in failure, performing relatively poorly among various industry indexes for the entire month, continuing a weak trend in the short term. The Citic II industry index fell by 1.49% for the whole month, lagging behind the Shanghai and Shenzhen 300 Index (which rose by 1.65%) by 3.14 percentage points. The differentiation within the securities sector intensified in January, with top securities firms significantly suppressing the monthly performance of the securities index. The number of stocks outperforming the sector index increased significantly month-on-month, and the fluctuation range of the sector's average P/B ratio moved up to 1.426-1.541 times. Core market factors affecting the monthly operating performance of listed securities companies in January 2026: 1. Equities faced resistance, fixed income gradually warmed up, and proprietary businesses further recovered significantly. 2. Average daily trading volume and total trading volume reached historic highs, with brokerage business prosperity rising to historic highs. 3. Margin trading balance continued to hit historic highs, with daily average margin balances experiencing significant growth. 4. Equity financing and debt financing significantly increased, with the total volume of investment banking business reaching a new high in nearly 12 months. Outlook for the operating performance of listed securities companies in February 2026: Proprietary: The equity market cooled significantly, fixed income market rebounded from a low level but with a narrower range, leading to a significant decline in the proprietary business compared to the previous month. Brokerage: Average daily stock trading volume decreased significantly, with fewer trading days resulting in a larger decrease in monthly total trading volume. Hence, the brokerage business prosperity is expected to experience a significant seasonal decline. Margin Trading: Margin balance is expected to show a slight decline compared to the previous month, but the contribution of margin trading business's performance will remain high compared to the past 12 months. Investment banking: Due to a significant simultaneous decrease in equity and debt financing, it is anticipated that the total volume of industry investment banking business in February will experience a significant decline compared to the previous month. Overall operating performance: Considering the latest changes in various market elements, and influenced by seasonal factors, it is predicted that the consolidated monthly operating performance of listed securities companies in February 2026 will fall to a relatively low level compared to the past 12 months. Risk Warning: 1. Weakness in equity and fixed income markets causing a decline in the operating performance of listed securities companies; 2. Short-term price volatility risk; 3. Policy effects related to capital market reforms falling short of expectations.