Huatai Securities: optimistic about the valuation repair opportunities for securities firms under the continuous enhancement of the market and performance expectations.

Huatai Securities research report shows that since the beginning of the year, the equity market has been continuously rising, but the securities index has not recovered as much as the broader market. The valuation of large securities firms is still at historically low levels. Currently, the return on equity assets is stable and increasing, stock turnover and margin trading are continuously breaking through, and securities firms are entering a phase of strong recovery. There is optimism about the sustainability of securities firms' performance growth and valuation recovery. From the perspective of institutional holdings, as of the end of the second quarter of 2025, the position of actively managed equity funds holding securities firms' stocks is 0.64%, which is still at a low level since 2018, and significantly underweight compared to the Shanghai and Shenzhen 300 free float market capitalization weight. Stocks to watch: 1. Top securities firms leading in wealth management and international business; 2. Mid-sized securities firms with low valuations.