Key Takeaways:
JPMorgan expects Chinese broker earnings to rise 17% year over year in the second half, 12 points above consensus, and upgraded CITIC Securities to Overweight.
"Policy support such as reforms to the STAR Market and ChiNext board will support financing for technology innovation enterprises, bringing continued listings of technology IPOs and related capital market activities," JPMorgan said in a research report.
The bank raised its target price on CITIC Securities (06030.HK) to HKD34.4 from HKD29.6 and cut East Money (300059.SZ) to Neutral from Overweight. JPMorgan named CICC (03908.HK) and CITIC Securities as the sector's top picks, citing strong project pipelines and execution track records in technology financing. Other target-price increases include CMSC (06099.HK) to HKD20.5 from HKD17.2, GF Securities (01776.HK) to HKD24.2 from HKD20.3, and HTSC (06886.HK) to HKD23.6 from HKD19.8. China Galaxy Securities (06881.HK) holds an Overweight rating with a HKD10.8 target, while Guotai Haitong (02611.HK) stays Neutral with a target raised to HKD16.3 from HKD13.7.
JPMorgan said mainland brokers are entering a more differentiated market, with retail growth slowing on declines in A-share average daily turnover and margin financing balances, while institutional business accelerates on stronger demand and policy support. The bank prefers full-service brokers over retail-focused peers, as they are better positioned to capture the equity capital market cycle driven by the STAR Market. Its 2026 earnings forecasts sit 12 points above market consensus, and JPMorgan expects continued upward revisions to become a key driver of valuation re-rating for broker stocks.
The upgrade reflects JPMorgan's conviction that technology IPO activity will lift investment banking, cornerstone investment, and pre-listing investment income for leading brokers. CICC and CITIC Securities, with their deep project pipelines in technology financing, stand to benefit most from the reform-driven listing cycle. Broker H-shares traded lower on Monday, with CICC down 3.9 percent and CITIC Securities down 2.2 percent intraday, as investors weighed near-term valuations against the structural tailwind from technology listings. The gap between institutional and retail business lines is likely to widen as the STAR Market reform cycle matures, favoring brokers with strong underwriting and pre-IPO investment capabilities. Investors will watch for further policy details on STAR Market and ChiNext reforms, which JPMorgan expects to sustain the listing pipeline through the second half of the year.
This article is for informational purposes only and does not constitute investment advice.
