GF Securities: The brokerage performance has continued to rise, and we are optimistic about the sector's potential for further recovery.

GF SEC released a research report stating that the capital market remains active, with the performance of the securities sector continuing to improve, albeit with lagging valuations. They are optimistic about the potential for valuation recovery in the future. Under a neutral assumption, industry net profit is expected to increase by 27% in 2026, with a positive outlook on the continued growth of wealth management. The transformation towards proprietary trading and internationalization is expected to enhance the leverage and ROE of leading securities firms. Investment banking and capitalization are expected to drive high performance elasticity in the securities sector, which is still in the early stages of recovery. As funding pressures ease and incremental funds continue to enter the market, there is considerable room for the valuation and holdings of securities firms to increase, with the enhancement of profitability and growth trends in technology-related assets. Key points from GF SEC: - The securities sector has been underperforming in the first half of 2026, lagging behind the Shanghai Composite Index by 11% since 924, lagging behind by 15%. - Despite weak market performance in the first half of 2026 due to funding constraints and market volatility, individual stocks have shown significant differentiation, with technology-focused assets contributing to performance and valuation elasticity. Both primary and secondary markets are experiencing a rebound in business activity. - Heavy asset operations: Driven by technology and internationalization transformation, triggering a resonance in ROA and leverage. - Light asset operations: Policy optimization and sustained prosperity drive business transformation development and stable return on equity recovery. Risk factors include unexpected economic downturn, interest rate fluctuations, and intensified industry competition.