Changes in the securities sector increased. CICC rose more than 8%, China Galaxy rose more than 6%, and Dongxing Securities, Cinda Securities, and CITIC Construction Investment followed suit.
On the ETF side,Huafu Fund Securities ETF Pioneer, E-Fangda Fund Hong Kong SecuritiesETF,Huitianfu Fund Securities IndexETF,SPDB AXA Securities CompanyETF,Huaxia Fund FintechETF Huaxia,Huabao Fund Fintech ETF, Tibet Dongcai Fund SecuritiesETF Dongcai,Huaxia Fund BrokersETF funds rose.
Recently, after the supervisory authorities encouraged brokerage firms to expand, acquire, restructure, and become stronger, there were quite a few rumors of brokerage mergers and acquisitions in the market. In response, China Financial Corporation and Galaxy Securities Co., Ltd.The complaint stated that there are currently no mergers and acquisitions, nor are there any undisclosed matters that should be disclosed.
CICC said that as of the disclosure date of the announcement, the company had not received any written or oral information from government departments, regulators, or company shareholders about the above rumor. As confirmed by the company and the controlling shareholder Central Huijin Investment Co., Ltd., the controlling shareholder did not plan the above rumors or other important matters that should be disclosed but not disclosed, nor did the company have any information that should be disclosed but not disclosed.
Meanwhile, Galaxy Securities also issued a clarification announcement. Galaxy Securities said that recently, the company is concerned about market rumors that the company will merge and restructure with CICC, and is now providing clarification. As of the disclosure date of the announcement, the company has not received any written or oral information from government departments, regulators, or controlling shareholders or actual controllers of the company regarding the above rumor. As confirmed by the company, the controlling shareholder China Galaxy Financial Holdings Co., Ltd. and the actual controller, Central Huijin Investment Co., Ltd., the actual controller, the controlling shareholder and actual controller did not plan the above rumours or other important matters that should be disclosed but not disclosed, nor did the company have any information that should be disclosed but not disclosed.
In addition to these two companies, recently, quite a few brokerage firms have denied rumors of mergers to investors through interactive platforms, such as Tianfeng Securities, Guojin Securities, Guotai Junan, Dongxing Securities, and Capital Securities.
Looking at fundamentals, 43 listed brokerage firms achieved a total revenue ratio of +1.87% in the first three quarters of 2023, including brokerage business -12.48%; investment banking business -18.34%; net interest income --21.92%; asset management business +1.36%; and investment business +69.82% year on year. Net profit was realized at 109.973 billion yuan, +6.46% over the same period last year. 2023Q3 revenue was +10.75% yoy and -16.05% yoy. Among them, the brokerage business is -17.49%, -11.56%; the investment banking business is -33.02%, -13.28%; net interest income is -33.52%, -17.17%; the asset management business is -1.73%, -1.51%; and the investment business is +46.62%, or -36.85%. Achieved net profit of -10.04% year-on-year and -27.99% month-on-month.
In the third quarter of 2023, the total assets of listed brokerage firms fell 2% from H1 to 11.6 trillion yuan. Among them, client capital decreased by 14.17% compared to H1, and financial investment assets increased 2.39% compared to H1. The average leverage ratio of listed brokers in 2023Q3 fell slightly to 4.11 compared to 2023H1, and the overall annualized ROE (TTM) fell 0.77pct to 6.18% from H1.
The performance of leading brokerage firms is divided, and the flexibility of small to medium brokerage firms is highlighted. A total of 32 of the 43 listed brokerage firms achieved positive growth in net profit. The net profit growth rate of the top ten brokerage firms in the top ten in net assets fell short of the industry average, and internal segmentation was obvious. Among them, the net profit growth rate of Huatai Securities and GF Securities was as high as 22.55%/11.00%. The growth rate of the remaining leading brokerage firms slowed down, with a few being negative. Based on the 2022Q1-3 low base and self-operated business flexibility, some small to medium brokerage firms have achieved significant short-term performance reversals.
Affected by market turmoil and downturn, the contraction of trading, and the slowdown in the pace of IPO issuance, various businesses in the securities industry were under pressure in the first three quarters of 2023. Investment-only business achieved high growth at a low base, and the fundamentals of the industry bottomed out. In the long run, Wanhe Securities believes that future economic recovery and the introduction of subsequent reform policies to activate the capital market will promote the restoration of the performance of listed brokerage firms, promote a steady rise in the ROE center of the securities industry, and open up room for growth in the industry. As of November 10, 2023, the PB valuation of the Shenwan Securities Index is 1.26 times, at 22.44% of the historical quartile of the past five years. It has a high cost performance ratio and margin of safety, and is optimistic about the sector's subsequent market.
China Merchants Securities said that policies and the core catalysts of liquidity resonate, and the prosperity of the capital market and securities industry is expected to continue to recover in the context of a low base. The prosperity of the securities industry is expected to continue to recover in the fourth quarter, and the brokerage sector is expected to catalyze valuations.