HK Stock Market Move | Chinese securities firms' stocks fell across the board as regulators ordered a halt to the addition of stock-crossing TRS. The impact on securities firms' revenue is relatively small.

Chinese brokerage stocks fell across the board. As of the press release, GF SEC (01776) fell by 4.13% to HK$17.17; Guolian Minsheng (01456) fell by 3.88% to HK$3.96; China Securities Co., Ltd. (06066) fell by 3.57% to HK$12.14; and Shenwan Hongyuan Group (06806) fell by 3.04% to HK$2.55. On the news front, according to Caixin report, it was learned from multiple sources that yesterday brokerage firms were suspending the increase in the scale of stock-type cross-border TRS in accordance with regulatory requirements, while existing positions can be settled normally without forced liquidation. Some industry insiders roughly estimated that the current scale of cross-border stock-type TRS is between 200 billion to 300 billion yuan. Calculated at an annual fee rate of around 1.5%, this corresponds to a net income of about 30 billion to 45 billion yuan. In the overall revenue of listed brokerage firms, this accounts for approximately 0.5% to 0.8%; compared to top-tier brokerage firms, it represents about 1.3% to 2% of their income. In addition, according to Yicai report, there are recent views that suggest listed brokerage firms are acquiring equity in technology companies through mechanisms like mandatory co-investment in the Sci-Tech Innovation Board, meaning that investing in brokerage firms is akin to buying discounted technology funds. Industry insiders say that the "three investment linkage" model of brokerage firms is gradually realizing its returns. CICC previously stated that under the "three investment linkage" model, the profit model of brokerage firms is shifting from fee income to the full life-cycle value exploration of tech companies.