The market is bad, how miserable is the brokerage business? The turnover of the two cities has been in the forefront of the Beijing area, with all 584 brokerage branches. You can't imagine how much the total profits were in August.

Data learned by Chinese reporters of brokerages show that the total profits of securities branches in Beijing in August were less than 5 million, the lowest in recent years. Of the more than 580 brokerage branches in Beijing, only 155 are profitable, that is to say, more than 70% of the business departments did not make a profit in August. This phenomenon is obviously also a rare phenomenon for many years.

The industry-wide market is even more bleak. Authoritative data show that the revenue of 131 securities companies (including capital management and investment banking subsidiaries) reached 13.501 billion yuan in August, down 47.38 percent from the previous month; the net profit was 1.61 billion yuan, down 80.62 percent from the previous month. 80 of the 131 securities companies made profits. In other words, 51 securities companies did not make a profit in August, accounting for nearly 40%.

The brokerage business department is losing money across the board, especially in August. "this is the general perception of brokerage people. Affected by the decline in the Shanghai and Shenzhen stock markets and bond markets and the decline in market trading volume, the performance of the securities industry declined significantly in August, and the brokerage business and securities investment income, which are closely related to the securities market, decreased significantly compared with the previous month.

There are 584 branches of securities firms in Beijing, with total profits of less than 5 million

Data learned by Chinese reporters of brokerages show that the total profits of securities branches in Beijing in August were less than 5 million, the lowest in recent years. Of the 584 brokerage branches in Beijing, only 155 are profitable. In other words, 429 sales departments did not make a profit in August, accounting for more than 73%.

Although the income of the sales department has long been diversified, the most important thing is still commission income. According to the data released by the Securities Association, the average commission rate of the industry stabilized at 3.81 per 10,000 in the first half of the year, which has entered a slow decline. However, while the commission rate has stabilized, the volume of stock trading, another key factor affecting brokerage commission income, continues to decline.

Since August, the secondary market has shrunk significantly, and there are even trading days, with a turnover of less than 100 billion yuan in Shanghai. The stock-based trading volume of brokerages in Beijing reached a low of 1.39 trillion in August, according to data from the Shanghai and Shenzhen stock exchanges. The turnover between the two cities in the Beijing area was 1.63 trillion in July and 1.6 trillion in June. Even in February of the Lunar New year, when the two cities were closed for several days, the turnover in the Beijing area was 1.64 trillion.

In terms of turnover in the two markets, the trading volume in Beijing in August was 591.537 billion yuan in Shenzhen, accounting for 7.47 percent of the country's total, and 798.082 billion yuan in Shanghai, accounting for 11.87 percent of the country's total.

51 securities companies lost money in August

The general perception of brokerage people is that "the brokerage business department is losing money across the board, especially in August." Affected by the decline in the Shanghai and Shenzhen stock and bond markets and the decline in market trading volume, the performance of the securities industry declined seriously in August.

Previously, 32 A-share brokerages released monthly report data in August, which has been called "Black August" by people in the industry, with revenue of 9.331 billion yuan, down 48.57% from the previous month, and net profit of 1.807 billion yuan, down 73.89% from the previous month. Among them, 80% of the net profits of brokerages fell by more than 50%. Nine brokerages lost money in August.

According to the latest data obtained by Chinese journalists of brokerages, the performance data of the entire securities industry in August are even more bleak. The revenue of 131securities companies (including capital management and investment banking subsidiaries) reached 13.501 billion yuan in August, down 47.38 percent from the previous month; the net profit was 1.61 billion yuan, down 80.62 percent from the previous month. 80 of the 131 securities companies made profits. In other words, 51 securities companies did not make a profit in August, accounting for 38.93%.

There is a serious decline in brokerage and self-management.

In August, the Shanghai Composite Index fell 5.25%, the Shenzhen Composite Index fell 7.93%, the average daily trading volume of stocks in the two cities fell 19.14% from the previous month, and the Composite net Price Index of China Bond fell 0.27%.

In terms of the proportion of various business income of securities companies in August, the business performance closely related to the secondary market was poor, and the net income of agency securities trading business and securities investment income decreased significantly compared with the previous month.

Brokerage remains the biggest contributor to revenue. As the most important source of income for the brokerage business, the net income of brokerage agents buying and selling securities (including leasing of seats in the trading unit) was 4.429 billion yuan in August, down 18.10% from the previous month.

The return on securities investment fell more significantly than the previous month. The securities investment income of the whole industry in August was 2.057 billion yuan, down 83.93% from the previous month. Securities investment income includes proprietary securities investment income and fair value change income of proprietary securities included in the current profit and loss, of which the investment income of securities products is 6.355 billion yuan, and the net income of fair value change of securities investment is-4.298 billion yuan.

In August, industry-wide investment banking revenue and credit business income increased significantly month-on-month. As far as investment banking business is concerned, the net income of securities underwriting and recommendation business was 1.814 billion yuan, an increase of 16.87% over the previous month; and the net income of financial consultant business was 754 million yuan, an increase of 7.40% over the previous month. As far as credit business is concerned, the interest income in August was 11.578 billion yuan, of which the interest income from margin trading was 5.454 billion yuan, and the interest income from stock pledge was 3.893 billion yuan, both slightly lower than the previous month. However, due to the decline in expenditure, the net interest income increased by 89% in August compared with the previous month.

It is also worth mentioning that revenue growth has declined, and securities firms are generally cutting back on expenses. The industry's operating expenditure in August was 12.05 billion yuan, down 20% from the previous month, of which the salary of employees was 6.413 billion yuan, down 27.34% from the previous month.

The net assets of the industry decreased by 1.629 billion yuan in August.

By the end of August 2018, the total assets of 131 securities companies were 6.35 trillion yuan, with assets of 25.25 trillion yuan and net assets of 1.88 trillion yuan after deducting customer funds. Compared with the end of last month, after deducting client funds, assets decreased by 40.013 billion yuan, net assets decreased by 1.629 billion yuan, and registered capital increased by 35 million yuan. The average financial leverage of the industry is 2.79 times.

After adjustment, the total assets inside and outside the balance sheet of securities companies at the end of August totaled 5.6 trillion yuan, including the balance of assets on the balance sheet of 5.25 trillion yuan, the accrued amount of off-balance sheet securities derivatives of 208.325 billion yuan, the accrued amount of asset management business of 32.164 billion yuan, and other off-balance sheet items of 106.143 billion yuan.

How to get out of the predicament

After the monthly report of listed securities firms was released in August, Shenwan Hongyuan issued a research report saying that the Alpha attribute of the current leading brokerage performance level has been very obvious, and the future sustainable performance Alpha will eventually be reflected in the valuation logic. In the short term, the performance of the leading securities firms has strong certainty. Seven primary OTC options dealers were announced in early August, including CITIC, GF Securities Co., LTD. and Guotai Junan, confirming that our financial innovation is the judgment of the "franchise" of the leading securities firms; if the CDR issue, Shanghai and Lunxing opened this year, the leading securities firms will also benefit the most.

In the long run, under the great development of national cultivation of leading securities firms and direct financing, the construction of multi-level capital market continues to advance. With their leading advantages in capital, pricing, risk control and customer resources, leading securities firms will take the lead in raising the level of ROE by increasing leverage. In addition, the market has a serious lack of understanding of the expectation of explosive growth of over-the-counter options business brought about by the new rules on structured deposits in the future, which will become an important support for the medium-and long-term growth of leading securities firms.

Haitong cut his full-year profit forecast and expects net profit to fall 25 per cent year-on-year in 2018. Haitong believes that the business pattern of securities firms will achieve a major reshuffle and a difficult transition under strong supervision. The main points to watch include:

1. Internet finance continues to be deeply integrated, wealth management evolves to 3.0, and collaboration among business units is expected to increase.

2. Return to the nature of the investment bank, standardize the issuing market, guard against financial risks and introduce running water into the capital market.

3. In the era of large capital management, while going to the channel, we will continue to vigorously develop active capital management.

4. transform from self-management to investment transactions, increase non-directional self-management, and smooth the performance fluctuations caused by fluctuations in the secondary market.

5. The capital market will be gradually opened up to create a service model of linkage at home and abroad.