Looking back at the four rounds of bull markets from 2005 to 2007, 2008 to 2009, 2014 to 2015, and 2019 to 2021, the rise of brokerage stocks is the most significant and is the main booster of the market. This round of bull market starts, how far can this brokerage "bull" go? Historically, there is still room for growth.
On September 30, A-share brokerage stocks collectively rose by the limit, and since September 24, the A-share Wind Brokerage Index has risen by 38%, leading all sectors, and has risen by 51% since the low point on July 9. During the National Day holiday, Hong Kong stocks and Chinese brokerage stocks rushed wildly, and the sector rose by 46% in three trading days. The three leading companies of CITIC Securities, Huatai Securities and China Merchants Securities rose by 36%, 58% and 121% respectively during the period.
The average premium rate of AH shares of brokerage stocks was 71.98% on October 4, down 78.73 percentage points from September 30. Only 4 brokerage stocks have an AH premium rate of more than 100%, a decrease of 7 from before the holiday. The premium rate of Huatai Securities' AH shares reached -1.43%, the price of H shares exceeded the price of A shares, and the premium rates of China Merchants Securities and CITIC Securities' AH shares also dropped to 6.98% and 8.3%, and the price of H shares is about to catch up with A shares. The smaller the premium of AH shares, the more cost-effective A shares are relative to investment.
The recent rally in brokerage stocks is first and foremost a repair of valuations. At the beginning of 2024, the brokerage P/E ratio fell below 20 times, and on September 30, the brokerage P/E ratio has risen to 30.95 times, nearly 50% higher than the median of 21.99 times in the past 10 years, but still far below the P/E ratio of 59.22 times in December 2014. The average price-to-book ratio of brokerages in the past 10 years is 1.86 times, the median is 1.74 times, and the price-to-book ratio of brokerages rose to 1.53 times on September 30, which is still at a relatively low level, and the price-to-book ratio of brokerages once rose to a high of 5.25 times in April 2015.
The rise in brokerage stocks reflects the explosion of market investment enthusiasm. On September 30, the trading volume of A-shares hit a record of 2.6 trillion days. During the National Day holiday, various brokerages "do not close" to provide investors with account opening services. Tianfeng Securities said that the logic of "increasing market trading activity and improving the fundamentals of brokers" was quickly recognized by the market. The logical deduction speed of the brokerage sector exceeded expectations, and the fundamental market was deduced in advance. With the support of market reflexivity, the strength and speed of market interpretation may exceed market expectations.
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