China Securities Co., Ltd.: Will the brokerage sector be absent from the market in the slow bull market background?

China Securities Co., Ltd. released a research report stating that the activity level of the stock market is a synchronous indicator of the valuation and performance of the securities industry, and its prosperity determines the lower limit of sector valuation; unexpected financial policies are the core variables that open up the upper limit of sector valuation. Currently, with a high level of activity in the capital market combined with expectations of a slow bull market, a solid foundation for active trading in the stock market in 2026 has been established; and the "Fifteen-Five" planning proposal shows a high degree of attention to the capital market, not ruling out the possibility of catalyzing financial policies exceeding expectations in the future. Overall, the securities sector has a clear pattern of having a bottom and room for growth. From a quantitative perspective, taking 50 sample securities firms as research objects, under different scenarios of daily trading volume of 18,000/20,000/22,000 billion yuan, the corresponding PB (LF) of the net asset base in Q3 2025 is 1.36 times, 1.43 times, and 1.50 times respectively, which constitutes the lower limit of valuation for the sector. 1) The current valuation has reached a solid lower limit for the sector, with sufficient safety margin. As of January 16, 2026, the total market value of sample securities firms is approximately 399.01 billion yuan, with a corresponding PB (LF) of only 1.34 times, which is lower than the calculated lower limit of valuation. Against the backdrop of a slow bull market in A shares, if the daily trading volume of the stock market in 2026 gradually stabilizes and steadily rises within the assumed range, the sector is expected to start a rally at some point, approaching the calculated range of 1.36 to 1.50 times PB. 2) The catalysis of financial policies is a key variable in opening up the upper limit of valuation. If there is unexpected catalysis of financial policies in the future, the market will give a higher valuation premium based on the policy-driven growth logic, and the sector's valuation flexibility is expected to rival the two boom cycles of 2014-2015 (2.0-4.0 times PB) and 2020-2021 (1.8-2.0 times PB), thereby breaking through the existing valuation range.