China’s brokers expected to continue robust performance with blockbuster IPO offerings

Chinese brokers experienced impressive profits during the first half of the year, primarily due to active trading in the A-share market. This surge in brokerage revenues surged by over 50 per cent, with the sector expecting robust initial public offerings (IPOs) to fuel underwriting and sponsorship business in the second half. The industry's overall performance was strong, with 150 brokers reporting an average 23.5 per cent year-on-year increase in net profit.

This growth was driven by a 31 per cent increase in operating revenue, mainly fuelled by a 51 per cent jump in brokerage income from heightened market activity. Investment advisory services also saw significant growth, with net revenue soaring 57.24 per cent, indicating a high demand for research reports and wealth management advice.

Citibank, a Wall Street investment bank, expressed optimism towards the sector's outlook, predicting a return on equity of around 11 per cent in 2026, which implies a 36 per cent upside for H-share brokerage stocks. The top players, Citic Securities and Guotai Haitong, generated 96.9 billion yuan in first-half revenue, comprising nearly 30 per cent of the industry total, and 44.9 billion yuan in net profit, making up 32.4 per cent.

Citibank also foresees underwriting and sponsorship as a key growth engine for the second half, anticipating strong equity fundraising momentum to continue into the third quarter, supported by significant IPOs like ChangXin Memory Technologies and Unitree Robotics. Looking ahead, Yangtze Memory Technologies Corp's IPO application has been accepted, aiming to raise 33 billion yuan, while a Tencent-backed Shanghai Enflame Technology IPO has already raised 6.12 billion yuan.

Despite potential moderation in second-half brokerage income due to steady-to-weak A-share performance, the industry is expected to maintain stability as the regulatory impact emerges gradually.