China Securities Monthly bulletin: Institutional resilience offsets softer retail trends; CICC remains our top pick

Brokers' September data presented a mixed picture. On one hand, retail business momentum continued to moderate, with A-share ADT declining 19% m/m, to Rmb1.83tn in September, and margin-financing activity remaining relatively subdued. Weak equity market performance also continued to weigh on brokers' equity investment exposure. On the other hand, institutional business momentum remained resilient, with both A- and H-share IPO issuance recovering sequentially in September and IPO pipelines remaining robust. A- and H-share brokers currently trade at a 0.94x and 0.63x forward P/B, respectively. We believe the soft 3Q26 sector earnings outlook and weaker investor sentiment are largely priced in. Recent share price weakness therefore presents an opportunity to accumulate leading brokers (e.g., CICC and Citic Sec) and names with strong 3Q earnings momentum (e.g., CICC and CMS), in our view. CICC remains our sector top pick. Our pecking order is CICC > CMS = Guangfa > Citic Sec > Guotai Haito