Guotai Haitong: Equity financing continues to recover; leading brokerages are expected to maintain their lead.

Guotai Haitong released a research report stating that the pace of A-share equity financing continues to improve marginally. Year-to-date, A-share IPO scale rose 209% year-on-year, and refinancing scale increased 105% year-on-year. The Hong Kong stock market remains active, with a significant year-on-year boost. Year-to-date, Hong Kong IPO scale reached HK$342.4 billion, up 153% year-on-year. The rebalancing of investment and financing has entered a new stage, and the dividends of reform continue to be released. Leading brokerages with greater advantages in corporate client resources, professional service capabilities, and cross-border service capabilities are expected to maintain their leading position in the evolution of the investment banking business ecosystem. Guotai Haitong's main views are as follows: A-shares: Equity financing continues to recover, with IPOs more than tripling year-on-year 1) IPO: Based on issuance date statistics, there were 19 A-share initial public offerings in August alone, an increase of 2 month-on-month, with total fundraising of RMB 21.7 billion; 2) Refinancing: Based on issuance date statistics, the refinancing scale in August alone was RMB 38 billion. Year-to-date, A-share IPO scale rose 209% year-on-year, and refinancing scale increased 105% year-on-year, continuing the improving trend; 3) M&A and restructuring: Since the beginning of the year, a total of 63 major restructuring events of listed companies have been disclosed, of which 7 occurred in August; 4) Bond issuance: Cumulative underwriting scale increased year-on-year. In August, the issuance scale of core bonds (corporate bonds + enterprise bonds + convertible bonds) was RMB 438.6 billion, with a cumulative year-on-year growth rate of +9% since the beginning of the year. Hong Kong stocks: IPOs continue to grow rapidly, Alibaba placement drives monthly refinancing above HK$100 billion Since the second half of 2024, trading activity in the Hong Kong stock market has increased significantly, and improved market liquidity has driven a sharp recovery in Hong Kong IPOs and refinancing. Year-to-date, Hong Kong IPO scale reached HK$342.4 billion, up 153% year-on-year, of which August accounted for HK$3.7 billion; refinancing scale reached HK$308.6 billion, up 31% year-on-year, of which August accounted for HK$108.2 billion, mainly due to Alibaba's large placement. The rebalancing of investment and financing has entered a new stage, and the dividends of reform continue to be released, benefiting multiple businesses including brokerage investment banking At the June Shanghai Lujiazui Finance & Trade Zone Development forum, Chairman Wu Qing's speech emphasized actively embracing the new round of technological revolution and industrial transformation, and continuously enhancing the inclusiveness and adaptability of the capital market system. He also proposed STAR Market reform measures such as expanding the scope of application of the fifth set of standards to the artificial intelligence field and implementing strategic deployments for the development of future industries. In July, the CSRC publicly solicited opinions on improving the refinancing rules for listed companies, proposing key measures such as establishing a shelf offering system for targeted additional issuance in refinancing and optimizing the small-amount rapid refinancing system. The bank expects brokerage investment banking to benefit from the accelerated reform of investment and financing and to share in the dividends of capital market reform. Investment recommendations The pace of A-share equity financing continues to improve marginally, Hong Kong stocks remain active with a significant year-on-year boost, and leading brokerages with greater advantages in corporate client resources, professional service capabilities, and cross-border service capabilities are expected to maintain their leading position in the evolution of the investment banking business ecosystem. Risk warnings: Significant fluctuations in the capital market; tightening of IPO pace.