The Hang Seng Index got off to a good start in September and the market mood has stabilized, with low-residual technology stocks rebounding, value industrials, resource materials and non-bank financials also outperforming. Among them, mainland brokerage stocks seem to be really out of the pattern of ups and downs for many years, in the context of a better macro situation, it is expected to walk out of a round of stable market matching the basic surface, attracting the renewed attention of funds.

Since 2015, after the crazy market in the big era, mainland brokers need to deleverage, deal with bad debts and non-performing assets, and are also subject to strict supervision of the industry, so that the brokerage business is basically in a period of consolidation and recovery, and the profit is fluctuating, and it will not return to stable growth until 2019. Therefore, in the past five years, the stock price performance of brokerage stocks has generally been in the stage of volatility and no increase. Today, the mainland's macroeconomic situation has improved, the rise of the middle class, asset investment, management and allocation needs are huge, and more importantly, the central policy has turned to activate the capital market, to help securities brokerages more.

From the continuous improvement of the connectivity mechanism, the increase of the science and technology innovation board in Shanghai, to the recent approval of A-share MSCI index futures trading in Hong Kong and the establishment of the Beijing Stock Exchange, the entire policy idea is to build A multi-level, internal and external connectivity of the advanced financial system. The core of the policy is to activate the capital market, so as to better serve the real economy, support small and medium-sized enterprises, especially innovative enterprises to obtain financing, and balance the capital flow structure that over-relies on bank loans. In the process, brokers will play a more active role and generate more business opportunities in investment banking, trading and asset allocation.

Very different from 2015, the A-share market trend is stable and trading is booming, even if there are more than one trillion yuan of transactions for several consecutive days, there is no hot speculation, and the balance of two financing is reasonable growth, which is A sign of the stability of the stock market, reflecting that after years of interconnection, large domestic and foreign institutional investors, main funds and other medium and long-term investors have greatly reduced the emotional characteristics of A-shares. More conditions for the development of slow bull market, conducive to brokerages to establish a stable and sustained path of profit growth.

In fact, the profit growth of securities companies in the past two years is not weak, with an average of more than 20%, and the profit growth in the middle of this year remains stable, with good performance in investment banking, trading, equity and bond placement, and asset and wealth management. Brokerages are showing signs of diversifying their revenue, making it easier for the market to reassess their depressed valuations.

With a price-to-book ratio ranging from 0.5 to 1.3 times and an average yield of 3 per cent, the operating environment for brokers is becoming more favourable and earnings transparency will be greatly improved, given the trend of earnings growth, low industry policy risks and increasingly active capital markets. Leading brokerage stocks have a high trend to break, and second - and third-line brokerages are also catching up. When market funds realize the general direction of the mainland's activation of the capital market, the trend of funds flowing to securities stocks will be more obvious, and this sector has been ignored by the market for a long time, and now it is time to shine again.