Guotai Haitong: Equity market volatility, residents' risk appetite continues to diverge.

Guotai Haitong released a research report stating that in August, market sentiment recovered from a low level, and residents' risk appetite continued to diverge. On the one hand, in August, residents' allocation to equity-related assets continued to slow, and sentiment toward entering the market cooled. On the other hand, new issuance of private equity funds and private asset management products remained at a high level, indicating that some high-net-worth clients still had relatively high risk appetite. The brokerage sector has strong certainty of profit growth in the third quarter, and attention should be paid to sector allocation opportunities. In terms of stock selection, it is recommended to focus on distinctive brokerages that hold or control leading public fund companies, have leading profit contributions, or are gaining retail share, as well as leading top-tier brokerages in international business. Guotai Haitong's main views are as follows: In August 2026, residents' asset allocation was mainly directed toward fixed-income assets. At the end of August 2026, the total market stock of wealth management products available for resident allocation reached RMB 374.9 trillion, up 0.7% MoM and up 10.4% YoY, with net value increments reaching 2.6 trillion units, down 2.4% MoM. Among them, the scale increments of public funds, private funds, private asset management, bank wealth management, and deposits were RMB 529.3 billion, RMB 13.4 billion, RMB 321.9 billion, RMB 214.9 billion, and RMB 36.6 billion, respectively, with contribution to increments reaching +20%, +1%, +12%, +8%, and +1%, respectively. In August, the equity market fluctuated and recovered, and residents' risk appetite diverged. In August 2026, overseas market leverage risks were cleared, regulatory signals to stabilize the market became clear, and the equity market fluctuated and recovered; in August, the stock fund index, mixed fund index, bond fund index, and money market fund index rose or fell by +4.07%, +5.89%, +0.25%, and +0.09%, respectively; amid continued equity market volatility, residents' risk appetite diverged. On the one hand, the pace of residents' allocation to equity-related assets slowed, and sentiment toward entering the market cooled. In August, new A-share account openings were 2.397 million, down 9.7% MoM; on the other hand, private funds grew rapidly, and new issuance of private asset management products remained at a high level, indicating that some high-net-worth clients had relatively high risk appetite. Public funds Equity fund shares saw net outflows, while money market funds were the main direction of increased allocation. At the end of August, the total scale of public funds in the whole market reached RMB 39.6 trillion, up 1.4% MoM, with an average unit net value of RMB 1.17, up 1.3% MoM; fund shares at period-end were 33.9 trillion units, up 0.0% MoM, among which the share increments of equity funds, mixed funds, bond funds, money market funds, and QDII were -78.91 billion, -5.26 billion, -54.23 billion, +155.35 billion, and -5.44 billion units, respectively. In terms of new issuance, in August, newly issued fund shares in the market were 59.36 billion, down 25.4% MoM; among them, new issuance of equity products was down 32.4% MoM, and new issuance of bond products was down 17.9% MoM. Private funds/asset management Scale grew steadily, while new issuance declined. At the end of August, the stock scale of private funds was RMB 25.7 trillion, up 0.1% MoM, and the newly filed scale of private funds was RMB 72.4 billion, down 40.7% MoM. In August, the stock scale of private asset management was RMB 13.5 trillion, up 2.4% MoM, among which the scales of equity, fixed-income, commodity and financial derivatives, and mixed products changed by +3.3%, +1.1%, +13.1%, and +6.5% MoM, respectively; in August, the newly issued scale of private asset management reached RMB 98.59 billion, down 19.7% MoM and up 16.1% YoY. Wealth management/insurance/deposits In August, the stock scale of bank wealth management reached RMB 31.9 trillion, up 0.7% MoM, among which the scales of fixed-income, equity, and mixed products rose 0.7%, 1.2%, and 1.0% MoM, respectively; in the first eight months, insurance industry premium income was RMB 4,819.2 billion, up 0.4% YoY, among which life insurance premium income was down 0.2% YoY, and property insurance premium income was up 2.2% YoY; RMB household deposits stood at RMB 172.9 trillion, up 0.02% MoM, with an increment of RMB 0.04 trillion. Risk warning: significant volatility in the equity market.