Raking in 2194 billion yuan in profits, yet the stock price still falls so badly it’s “headache-inducing”! 2025 brokerage performance is booming. Is it the right time to buy the dip in April—or to run away?

Why Do Stock Prices Fall Despite Surge in Brokerage Performance?

Our newspaper (chinatimes.net.cn) reporter Wang Zhaohuan Beijing reports

Recently, as listed brokerages have successively released their 2025 annual reports, the China Securities Industry Association also officially published the operating performance of 150 brokerages for 2025, presenting a “record-breaking” impressive report card: the entire industry achieved operating revenue of 541.17B yuan, up 19.95% year-on-year; net profit reached 219.44B yuan, up 31.2%, setting a new industry profit high in recent years.

Leading brokerages are even more profitable. CITIC Securities ranks first in the industry with a net profit of 30.08B yuan. After merging with Guotai Junan and Haitong Securities, performance soared, with Guotai Haitong’s net profit approaching 28 billion yuan; top players like China Merchants Securities and Eastmoney also achieved significant growth.

Performance is the core support for stock prices. With the industry’s collective profit surge, the sector should logically see a strong rally, but reality is too stark. According to data from Tonghuashun iFinD, as of March 27, since 2026, the stock prices of 44 listed brokerages have almost all declined, with 26 companies losing more than 10%, accounting for nearly 60%, with most brokerage stocks at valuation lows not seen in the past decade.

Watching the brokerage industry “making a killing” while their own accounts “losing everything”—this abnormal divergence between performance and stock prices puzzles countless investors: is the market wrong, or has investor perception been biased from the start?

Strong Performance Growth

Recently, the China Securities Industry Association compiled data on securities companies’ operations in 2025. Unaudited financial statements show that 150 securities firms achieved operating revenue of 541.17B yuan in 2025, up 19.95% from 451.17B yuan in 2024; net profit reached 219.44B yuan, up 31.2%.

Looking at specific business segments, all main business revenues grew to varying degrees: 2025’s net income from securities trading (including trading seat leasing) was 163.8B yuan, up 42.2% from 115.15B yuan in 2024; securities underwriting and sponsorship net income was 33.71B yuan, up 13.7% from 29.64B yuan; financial advisory net income was 5.78B yuan, up 7.25% from 5.39B yuan; investment consulting net income was 7.69B yuan, up 41.4% from 5.44B yuan.

Meanwhile, net interest income was 64.69B yuan, up 29.07% from 50.12B yuan; securities investment gains (including fair value changes) totaled 185.32B yuan, up 6.5% from 174.07B yuan; only asset management business net income slightly declined, to 23.89B yuan in 2025 from 23.95B yuan in 2024, a small decrease of 0.25%.

According to industry experts, the net profit growth rate of brokerages in 2025 significantly outpaced revenue growth, reflecting improved cost control and business structure optimization. Benefiting from increased market activity, income from agency securities trading and investment consulting rose sharply. Securities investment gains accounted for 34.2% of total income, though slightly down, it remains the largest revenue source and the biggest contributor to the industry’s net profit surge.

In addition, net interest income from margin trading, investment banking income driven by ongoing registration system reforms, and wealth management and fund distribution income driven by rising household wealth management demand all saw growth to varying degrees.

As of March 29, more than a dozen brokerages have officially disclosed their full 2025 annual reports, all profitable. Top brokerages like CITIC Securities, Guotai Haitong, and China Merchants Securities continue to leverage their comprehensive business lines and capital strength to consolidate their industry positions, expanding the “billion-yuan net profit club” to four members; merged and integrated brokerages like Lianhe Minsheng Securities and some small, specialized brokerages have achieved explosive performance through synergy effects or differentiation advantages.

The Divergence Paradox

Interestingly, despite this “brilliant performance report,” the brokerage sector has failed to drive stock prices higher, instead falling into a strange cycle of “performance versus stock price divergence,” leaving investors scratching their heads.

On March 27, CITIC Securities, the industry leader, hit a recent low of 24.01 yuan, down 25% from the peak of 32.53 yuan in late August last year.

Further data from Tonghuashun iFinD shows that since 2026, the stock prices of 44 listed brokerages have almost all declined, with only Huaxin Securities and First Venture seeing gains; 26 companies lost more than 10%, with Huatai Securities dropping 21.5% to lead the declines, while CITIC Construction Investment, Industrial Securities, Guotai Haitong, and Bank of China Securities all fell over 18%. Despite the bullish A-share market in 2025, only about 56% of brokerage stocks saw price increases, with the highest gains less than 40%.

“The core reason for the divergence between stock prices and performance is that the core logic of A-share market investment is expectation betting, not immediate performance realization,” said an investment manager at a Beijing-listed brokerage’s sales department in an interview with Huaxia Times: “Brokerages are typical cyclical sectors, highly dependent on market conditions, trading volume, market sentiment, policy guidance, and index movements—all directly affecting their profitability.”

He believes that the performance surge in 2025 is essentially a lagging reflection of last year’s market conditions—an “old news” positive. But the capital market always trades on “future expectations.” When 2025’s results are announced, market funds have already begun to worry about whether 2026’s performance can be sustained: can proprietary trading continue to generate high returns? Will regulatory policies change? These uncertainties cause funds to hesitate, leading to a phenomenon where “good news is followed by bad news,” or retail investors’ typical “selling on the facts.”

“Second, the shifting investment styles of market funds are also a key reason why brokerages are being overlooked,” the manager pointed out. In recent years, the main themes in A-share markets have focused on technology growth and emerging industries, with sectors like AI, low-altitude economy, and advanced manufacturing attracting continuous inflows. Institutional and retail funds flock to high-growth, high-valuation sectors, while brokerages, as large financial blue chips with low valuations, lack short-term explosive power, leading to low attention from capital.

Most importantly, the industry’s own structural weaknesses also cause doubts about long-term growth prospects. The manager said that although performance surged in 2025, brokerage profitability still relies heavily on “luck,” with commission rates for brokerage services continuing to decline, fierce industry competition squeezing profit margins, and volatile gains from self-operated businesses. When market conditions weaken, losses from proprietary trading can drag down overall performance. “Brokerage performance growth is more a phase of cyclical uptrend benefiting from market cycles, rather than sustainable growth driven by core competitiveness,” he explained, “so investors are reluctant to assign high valuation premiums.”

Additionally, a senior private equity professional told Huaxia Times that recent regulatory focus on stability and a “slow bull” market make it difficult for the market to experience the rapid surges seen in past bull markets. Instead, it tends to show oscillations and recoveries, causing some short-term profit-seeking investors to abandon brokerage stocks in favor of other opportunities.

Zhang Kaifeng, an analyst at Dongfang Securities covering non-bank financials, believes that historically, large-scale sector rallies in brokerages are usually triggered not by a single catalyst but by a combined improvement in valuation, policies, and macroeconomic conditions. Currently, the sector’s P/B ratio has fallen to a historic low, indicating pessimistic expectations are largely priced in; with declining interest rates, policies supporting steady growth and active capital markets are expected to promote risk appetite recovery and incremental capital inflows, boosting trading volume, margin trading activity, and profitability. From today’s perspective, the brokerage sector is still in a phase where fundamentals are recovering, but valuations are continuing to decline.

In Zhang’s view, from an earnings perspective, listed brokerages are entering a stage of moderate revenue recovery and accelerated profit release, laying a solid foundation for improving ROE.

Mistakenly Killed or an Opportunity?

Faced with the phenomenon of “stellar earnings but stagnant stock prices,” many investors ask: Are brokerage stocks currently a “misjudged golden opportunity” or a “cheap trap”? Do they have investment potential in 2026?

Data from Zhongyuan Securities shows that as of March 2026, the brokerage index has further broken below previous lows, rapidly approaching the lows of April 2025, with a year-to-date decline leading all CITIC first-level industry indices, maintaining a generally weak pattern.

Zhang Yang, an analyst at Zhongyuan Securities specializing in non-bank sectors, believes that as the opening year of the “14th Five-Year Plan,” 2026 will continue to play an important role in consolidating economic recovery, resisting external shocks, expanding residents’ property income channels, supporting technological innovation, and developing new productive forces. Under the policy tone of stabilizing the market and coordinating investment and financing, the overall operation of the capital market in 2026 is expected to remain relatively strong, and the securities industry will continue its upward cycle.

Zhang Yang thinks that the brokerage sector’s continued weakness this year depends on the resonance of industry fundamentals and policy support. The sector’s average valuation has limited room to fall further, and it is likely to consolidate at relatively low levels, building up for new investment opportunities and a potential rebound.

He points out that current valuation levels have fallen to about 1.2x P/B, providing a good long-term investment opportunity, and recommends maintaining close attention to policy developments, market trends, and specific brokerage stocks with low valuations relative to the sector average and those with differentiated competitive advantages.

Zhang Kaifeng believes that the sector is currently in a phase of “high growth potential in earnings + low valuation,” and with macroeconomic stabilization and high-quality market development, trading activity is expected to increase, with businesses like self-operated trading, brokerage, investment banking, and asset management driving sustained performance growth. Although short-term risks remain due to geopolitical conflicts and overseas disturbances, as these external impacts diminish, market risk appetite is likely to recover, and brokerage stocks with “performance growth + valuation decline” safety margins may see valuation recovery.