China Securities: Policy Support Broadens; Time to Turn More Positive?

A- and H-share brokers underperformed the CSI300 and Hang Seng Index by 0.6ppt and 6.6ppt, respectively, over Nov 3-6, broadly in line with our profit-taking call in our previous note following the Nov 2 rally. That said, following the recent correction, we are turning incrementally positive on the sector. Policy support is becoming broader and more coordinated, spanning stronger national team ETF purchases, enhanced PBOC/CSRC capital market support tools, strong participation from financial institutions, and repeated high-level commitments to market stability. Importantly, the third SFISF operation is larger and appears to be progressing faster than the previous rounds, providing a modest earnings benefit to participating brokers. Meanwhile, early signs of improving investor sentiment are emerging, with A-share ADT exceeding Rmb2trn on both Nov 4 and 5, and margin financing showing signs of stabilization. Following the recent correction, profit-taking pressure should also ease, while