Optimizing Capital Market Environment as Securities Regulation Mainstay
Since the beginning of 2024, regulatory policies have been inclined towards regulating the behavior of various entities in the capital market. The strengthened restrictions on securities lending and borrowing, as well as the stringent supervision of high-frequency quantitative trading, reflect the regulatory authorities' emphasis on fair trading and the protection of the interests of small and medium investors. Under this context, the policy level will continue the trend of strict regulation, and optimizing the capital market environment remains the main regulatory thread for the foreseeable future.
Since the beginning of 2024, the internal and external environments remain quite complex. In particular, the domestic economy still shows a slow recovery trend, while U.S. inflation has declined but remains at a relatively high level, with the Federal Reserve's interest rate cut timing continuously postponed. Various geopolitical events have a continuous impact on the global supply chain. The uncertainty in the investment environment brought about by multiple factors has, to some extent, affected the investment enthusiasm of domestic investors, thereby putting pressure on the equity market, leading to a wide fluctuation trend in the equity market in the first half of the year.
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For the securities industry, the sluggish capital market environment has had a certain impact on the business expansion of securities companies. Equity investment banking, margin financing and securities lending, derivatives, and high-frequency quantitative trading are all facing pressure. Moreover, the income from brokerage, asset management, and proprietary trading businesses are directly affected by the sluggish equity market. Overall, the operating pressure caused by multiple factors has put pressure on the performance of the securities sector. As of June 30, the year-to-date increases for the Shanghai Composite Index, the SSE 50, the CSI 300, and the SWS secondary securities index were -0.25%, 2.95%, 0.89%, and -13.38%, respectively, with the securities sector underperforming the core broad-based market indices.
In the first half of the year, the stock performance of the securities sector showed a significant divergence, with the difference in gains between the top and bottom stocks being nearly 70 percentage points. As of June 30, only four securities in the sector increased year-to-date, namely First Capital Securities (20.76%), Guoxin Securities (5.08%), Zheshang Securities (2.82%), and China Merchants Securities (2.02%). The rest of the stocks fell to varying degrees, with Jinlong Shares experiencing the largest decline, down 48.88%. Mergers and acquisitions remain the most market-focused fundamental catalyst in the current securities industry. Stocks involved in mergers and acquisitions, such as Guolian Securities and Zheshang Securities, have seen short-term fluctuations in stock prices catalyzed by the progress of mergers and acquisitions. However, under the influence of the industry beta, it is still difficult to achieve a significant independent trend.
Although the overall operation of the securities industry is under pressure, some companies have achieved year-on-year growth in performance against the trend, especially some listed brokers who have benefited from the optimization of business structure and the lower base in the same period of 2023. Their performance in the first half of the year is expected to achieve positive growth. Although brokers face significant pressure in expanding multiple businesses such as equity investment banking, and the fluctuation of the equity market has dragged down overall performance, some brokers have achieved "overtaking on the bend" through business structure adjustment. From the disclosed semi-annual performance reports of listed brokers, a few brokers are expected to achieve year-on-year growth in mid-term performance due to excellent performance in proprietary investment business, among which First Capital Securities and Hongta Securities have performed more prominently.
As an important bridge connecting investors, the capital market, and the real economy, there are many exogenous factors affecting the performance of securities companies, and all businesses are influenced by the macroeconomic environment, liquidity, and market conditions. Since the beginning of 2024, regulatory policies have been inclined towards regulating the behavior of various entities in the capital market. Strict regulation has become the main theme of policy, especially the new "Nine National Articles," which strictly regulate the entire process of company listing from the perspective of issuing companies, optimizing the capital market environment. The strengthened restrictions on securities lending and borrowing, as well as the stringent supervision of high-frequency quantitative trading, reflect the regulatory authorities' emphasis on fair trading and the protection of the interests of small and medium investors. Under this context, the policy level will continue the trend of strict regulation, and optimizing the capital market environment remains the main regulatory thread for the foreseeable future.
A positive cycle between "policy - capital market - investors" is expected to form.
On April 12, the State Council issued the "Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Capital Market" (referred to as the new "Nine National Articles"). The new "Nine National Articles" is the guiding document on the capital market issued by the State Council after 10 years since 2014. It plans the goals of high-quality development of the capital market for the next 5 years, 2035, and the middle of this century in stages and systematically proposes a package of policy measures to strengthen regulation, prevent risks, and promote high-quality development. The new "Nine National Articles" continues the trend of the regulatory authorities' comprehensive and detailed regulation of the entire process of the capital market since the beginning of the year, focusing on strictly controlling the access to listing, strictly regulating the continuous supervision of listed companies, and increasing the regulatory intensity of delisting behavior. On the basis of better sorting out the entire process of company listing, comprehensively deepening the reform and opening up of the capital market, and thereby promoting the entry of medium and long-term funds into the market.
To implement the new "Nine National Articles" and supporting policies, the China Securities Regulatory Commission (CSRC) has accelerated the implementation of the "1+N" policy system of the capital market, and publicly solicited opinions on six draft rules involving issuance supervision, listed company supervision, securities company supervision, and trading supervision, including significantly increasing the random inspection proportion of newly listed companies; further strict delisting standards and lowering delisting thresholds; strengthening the supervision of listed companies' dividends; strengthening the supervision of listed companies' directors, supervisors, and senior management's reduction; and strengthening the supervision of programmed trading, etc.
The Shanghai and Shenzhen stock exchanges have simultaneously publicly solicited opinions from the whole society on 19 specific business rules such as the "Stock Issuance and Listing Review Rules" and the "Stock Issuance and Listing Rules," involving aspects such as improving listing conditions, standardizing reduction, and strictly implementing delisting standards. Among them, in the first set of listing standards for the main board, the cumulative net profit indicator for the latest three years has been increased from 150 million yuan to 200 million yuan, and the net profit indicator for the latest year has been increased from 60 million yuan to 100 million yuan; for the first set of listing standards for the ChiNext board, the net profit indicator for the latest two years has been increased from 50 million yuan to 100 million yuan, and an additional requirement that the net profit for the latest year should not be less than 60 million yuan has been added. In addition, to further improve the quality of applications and prevent "diseased applications," the Shanghai and Shenzhen stock exchanges have added "withdrawal upon inspection" and "withdrawal upon supervision" situations on the basis of the original regulations, setting a 6-month application interval period.Dongxing Securities believes that although the core content of the new "Nine National Articles" is a continuation of previous regulatory requirements, the comprehensiveness of the policies introduced by the State Council, the China Securities Regulatory Commission (CSRC), and the three major exchanges, as well as the detailed requirements, are rarely seen in recent years. If the various entities in the capital market can fully, rapidly, and efficiently implement the new policy requirements, the ecology and overall appearance of the capital market are expected to undergo a qualitative change. Combined with more proactive fiscal and monetary policy support, a positive cycle between "policy - capital market - investors" is expected to accelerate, thereby effectively improving the investment returns of the capital market and the medium to long-term performance expectations of securities companies.
On July 10th, the CSRC approved the suspension of the securities lending business, increased the margin ratio for short selling, and further strengthened the counter-cyclical adjustment of short selling. At the same time, the regulation of algorithmic trading will be further strengthened. From the policy orientation, the CSRC's further tightening of the securities lending business is a continuation of the regulatory layer's measures to reduce the risks of short selling and smooth market fluctuations since the second half of 2023. In recent years, the fluctuations in the equity market have continued to increase, the profit effect has significantly weakened, investor sentiment has fallen into a trough, and transaction activity has also been greatly affected.
In response to the above situation, the regulatory layer has proposed a series of policy measures, including restricting the lending of shares allocated to strategic investors, increasing the margin ratio for short selling, reducing the transfer efficiency of market-oriented agreed申报securities in securities lending, and suspending the addition of new securities lending scale; at the same time, it is required to strengthen the management of customer trading behavior by securities companies, and continue to increase the regulatory enforcement efforts against illegal and irregular behaviors such as improper arbitrage through short selling transactions.
Data provided by the CSRC shows that since the introduction of strict regulatory policies in August 2023, as of the end of June 2024, the scale of short selling and securities lending has decreased by 64% and 75% respectively. The scale of short selling accounts for about 0.05% of the circulating market value of A-shares, and the proportion of daily short selling sales to the transaction volume of A-shares has decreased from 0.7% to 0.2%, significantly reducing its impact on the market.
From tightening the business of short selling and securities lending, to strengthening the management of algorithmic trading, although the regulatory layer has spared no effort to continuously suppress potential short-selling forces, the effect of policy care for the market has not been fully reflected from the recent relatively low performance of the equity market, and the important policy goal of protecting small and medium investors has not yet been achieved.
Based on this, on the basis of continuously reducing the scale of short selling and securities lending, the CSRC further increased the policy intensity, legally approved the suspension of the securities lending business, and the new policy was implemented from July 11, 2024; among them, the existing securities lending contracts can be extended, but they must be settled no later than September 30. At the same time, the approval of the securities exchange to increase the margin ratio for short selling from not less than 80% to 100%, and the margin ratio for private securities investment funds participating in short selling from not less than 100% to 120%, will be implemented from July 22, 2024.
In contrast, the CSRC's strengthening of the management of algorithmic trading particularly reflects the care for small and medium investors. Algorithmic trading pursues the best transaction price, promotes the best trading through preset programs, and there is a certain difference with small and medium investors in terms of information acquisition, transaction real-timeness, and priority, which to some extent reduces market fairness, while the disadvantage of general institutional investors in trading is relatively small.
According to the data announced by the CSRC, since the beginning of the year, the overall algorithmic trading in the securities market has been stable with a slight decline, and some positive changes have occurred in trading behavior. As of the end of June, there were more than 1,600 high-frequency trading accounts in the entire market, a decrease of more than 20% within the year, and the behavior that touched the abnormal trading monitoring standards has decreased by nearly 60% in the past three months. Next, the CSRC will mainly strengthen the supervision of algorithmic trading from five aspects: 1. Guide the securities exchange to issue the implementation details of algorithmic trading management as soon as possible; 2. Guide the securities exchange to announce and implement the abnormal trading monitoring standards for algorithmic trading as soon as possible; 3. Urgently formulate and issue the reporting guidelines for algorithmic trading of Northbound funds, applying the same regulatory standards to Northbound investors as to domestic investors; 4. Clarify the differentiated charging arrangements for high-frequency quantitative trading, and charge additional traffic fees and cancellation fees for high-frequency quantitative trading; 5. Continuously strengthen the monitoring and supervision of trading behavior, and strictly crack down on illegal and irregular behaviors.
The regulatory layer has proposed stricter regulatory requirements for the securities lending business and algorithmic trading, which are of the greatest concern to the capital market, especially small and medium investors. This is a measure to actively protect the rights and interests of small and medium investors, enhance their sense of gain, reduce market fluctuations, reduce the forces that may be involved in short selling, and combat illegal and irregular behaviors, which helps to promote the market to form a joint force for rising, and with important regulatory measures such as the "new nine national articles", the capital market environment is expected to continue to be optimized, thereby promoting medium and long-term value investment funds to enter the market for transactions.
To implement the spirit of the third plenary session of the 20th Central Committee, the policy side may maintain a situation where strict regulation and stable market are parallel in the future period. At the mid-year work conference of the CSRC to study and implement the spirit of the third plenary session of the 20th Central Committee, Chairman Wu Qing pointed out, "Focus on strengthening the foundation and strict supervision and management, and further comprehensively deepen reforms to eliminate institutional and structural problems, and accelerate the construction of a safe, standardized, transparent, open, vibrant, and resilient capital market." The key points of governance include the following six aspects: 1. Effectively maintain the stable operation of the market; 2. Serve the recovery and improvement of the real economy with greater strength; 3. Promote the in-depth and practical implementation of the stock issuance registration system; 4. Cultivate high-quality listed companies; 5. Focus on preventing and resolving risks in key areas such as private equity funds, trading venues, bond defaults, and industry institutions; 6. Greatly enhance the effectiveness of regulatory law enforcement.Dongxing Securities believes that the aforementioned six major policy focus points are the detailed implementation plans of the new "Nine National Articles" policy guidelines, reflecting the regulatory authorities' determination to stabilize the market while maintaining strict supervision. It is highly likely that the main policy line in the coming period will revolve around "strictness and stability," and the possibility of introducing strong stimulus policies at the capital market level is expected to be relatively low.
The key to the inflection point of brokerage business lies in the transformation of wealth management.
From the perspective of large-scale wealth business, market downturns have brought significant pressure to the wealth management business of securities firms, with trading volumes showing a slow downward trend, putting pressure on the income of securities brokerage businesses.
Looking at the equity market trading data, the trading volume has first increased and then decreased since the beginning of the year, with the average daily transaction volume in June falling to the level of September 2023. In the first quarter, under the circumstance of the China Securities Regulatory Commission (CSRC) strengthening the supervision of quantitative trading and stabilizing the market, along with the stabilization of consumption before and after the Spring Festival and the improvement of economic data, the market trading activity has significantly increased. The average daily transaction volume in March returned to over one trillion yuan after 11 months. However, in the second quarter, the decline in some macroeconomic data has suppressed investors' confidence in economic recovery, leading to a continuous decline in transaction volume. The average daily transaction volume in June was only 72.29 billion yuan, close to the low point in September 2023, and the atmosphere of "stock game" in the industry has become increasingly strong. The decline in transaction volume will inevitably have a negative impact on the brokerage business of securities firms, and it is highly likely that the brokerage business income will decrease quarter-on-quarter in the second quarter.
With the guidance of policies and the intensification of competition in the industry, the downward trend of the comprehensive commission rate of brokerage business continues. Wealth management transformation remains the core breakthrough point of the current brokerage business, and a successful transformation in wealth management is expected to drive the inflection point of the brokerage business to emerge. After the Central Political Bureau meeting in 2023, the CSRC introduced a series of policies to activate the capital market, which not only reduced fixed costs such as exchange fees but also directly or indirectly promoted the reduction of fees by securities firms.
At the same time, in the context of limited incremental space in the market, competition within the securities industry continues to intensify. Traditional brokerage business, as a low-added-value business, has become the main battlefield for price wars. Although the decline has slowed down in recent three years, the downward trend of commission rates has not changed, and it is difficult to see the inevitability of the inflection point appearing in the short term. Against this backdrop, the importance of securities firms accelerating the development of high-added-value wealth management business has been further enhanced. The current wealth management transformation is still the key breakthrough point for securities firms to deeply explore customer value, strengthen the collaboration between various business segments, and enhance the added value of commission business.
Domestic wealth management business is still a sunrise industry with huge market space. In China's 14th Five-Year Plan, promoting the new economic aggregate and the per capita income of urban and rural residents to a new level is a key task related to people's livelihood and welfare. As China's economy enters a high-quality development stage, it can be foreseen that the disposable income of residents will continue to grow steadily and rapidly in the coming period. The continuous accumulation of residents' investable assets, the accelerated iteration of investment structure, and the continuous change of investment concepts will further open up the domestic wealth management business space. In addition, the participation of Chinese residents in the securities market is gradually increasing, and the continuously enhanced investment awareness and continuously innovating investment concepts are expected to further enhance their recognition of securities firms' wealth management and asset management.
Effective collaboration with controlled and participated fund companies has become an important path for the accelerated development of securities firms' wealth management. Controlled and participated public funds provide a strong handle and contribute considerable performance for the transformation of securities firms' wealth management. Under the requirements of the asset management regulations, various types of asset management institutions in the market are competing on the same stage, which requires securities asset management to continuously and rapidly improve its active management capabilities. Expanding the scope of fundraising, vigorously developing collective products, promoting the public offering transformation of large collective products in line with regulatory trends, deeply participating in the public market, and actively applying for public offering licenses are necessary measures to cope with business transformation and are also important handles for the construction of product lines in the transformation of securities firms' wealth management.
Controlling public offering fund companies provide rich product support for the large wealth management line of securities firms and are a manifestation of the comprehensive competitive strength of securities firms. Among them, leading securities firms such as CITIC Securities and GF Securities, while harvesting investment income from controlling high-quality public offering fund management platforms, have greatly enriched their own wealth management business product supply. They are continuously aligning with advanced investment concepts, enhancing investment capabilities, and their business comprehensive strength has been recognized by the market. At the same time, controlled and participated public offering platforms are also expected to give full play to their brand power and market influence when public offering funds become the industry's tuyere and traffic entrance, providing an important customer guidance channel for securities firms.
From the perspective of the development of securities firms' business, the current market's core focus on the securities industry is still on wealth management. It will continue to be a growth-oriented securities business segment with both development certainty and elasticity in the coming period. In the process of promoting wealth management transformation, the construction of the financial product distribution system of securities firms is continuously improving. At the same time, the business focus is striving to move towards high-added-value directions such as "heavy investment advice," which reflects the advantages of securities firms' equity and fixed-income product investment advice capabilities. The transformation is gradually deepening. It is expected that with the continuous shift of business focus, the big logic of wealth management will evolve in the medium and long term. Faced with the increasingly fierce competition within the industry, leading wealth management platforms of securities firms with rich institutional customer resources and strong product investment advice and allocation capabilities are expected to continue to leverage the overall advantages of investment advice capabilities, achieving further improvement in the proportion of wealth management business income and performance.Crafting High-Quality Investment Banks as the "Mandatory" Path
In the first half of the year, the scale of IPOs and secondary financing continued to decline, affected by the continuous significant fluctuations in the equity market. The regulatory authorities intensified the counter-cyclical adjustment of the capital market supply, temporarily tightened the financing pace, and promoted the dynamic balance between investment and financing.
According to statistics from Tonghuashun, taking the first listing date as the standard, in the first half of 2024, the total equity financing in the primary market was 128.281 billion yuan, a year-on-year decrease of 79%, and a quarter-on-quarter decrease of 65.36%. Among them, the IPO financing amount was 30.487 billion yuan, a year-on-year decrease of 84.87%, and a quarter-on-quarter decrease of 78.26%; the private placement financing amount was 97.563 billion yuan, a year-on-year decrease of 75.55%, and a quarter-on-quarter decrease of 56.87%.
The structure of listed companies has become more balanced, and the pattern of the A-share market is continuously optimized. After the full implementation of the registration system, the positioning of various sectors in the A-share market has become more prominent. The main board mainly serves mature large and medium-sized enterprises; the STAR Market highlights the "hard technology" characteristics, strongly supports the development of domestic high-tech enterprises, and plays the role of a "pilot field" for capital market reform; the ChiNext mainly serves growth-oriented innovative start-up enterprises; the Beijing Stock Exchange and the National Equities Exchange and Quotations system jointly create a main position for serving innovative small and medium-sized enterprises. The main board, STAR Market, ChiNext, and Beijing Stock Exchange, different sectors develop in a staggered manner, complement each other, and gather strength, providing a smooth direct financing channel for enterprises that meet the sector positioning.
With the improvement of liquidity and the strengthening of investor confidence, in the medium and long term, under the policy main tone of increasing the proportion of direct financing, China's capital market will better play the convenient financing function, support the real economy to raise funds through direct financing, and fully play the media function of the capital market for the high-quality development of China's economy.
From the demand side, the enthusiasm of domestic enterprises for listing is still high, and securities companies have sufficient investment banking project reserves. However, against the background of a significant slowdown in the issuance pace of the main board and ChiNext, how to develop investment banking business and how to fill the revenue gap is a problem that securities firms need to solve urgently.
In the early stages of the New Third Board and Beijing Stock Exchange market, there were a group of specialized investment banks active. These investment banks have been deeply involved in the Beijing Stock Exchange for a long time, accumulating a relatively rich resource of companies to be listed, so they are relatively less affected by strict regulation, and can maintain a relatively stable source of income and business cycle, highlighting the differentiated advantages. With the gradual activity of the Beijing Stock Exchange trading, the attractiveness to various companies to be listed and intermediaries is expected to continue to increase, and the siphon effect is expected to continue to strengthen. After the "scale - valuation" positive feedback is formed, intermediaries will achieve considerable revenue growth.
Overall, no matter what the development path is, continuously improving qualifications is still the core essence of the development of investment banking business. As the "gatekeeper" of the capital market under the registration system and the main participant in the reform, the full implementation of the registration system will continue to open up new channels for serving the real economy and supporting enterprises to directly finance, opening up the incremental space for investment banking business of securities companies; at the same time, investment banking business needs more self-improvement to bear a greater era mission.
From the core level of listing pricing, under the registration system, the pricing power of new stocks is more handed over to the market, which puts higher requirements on the current main underwriters' issuance pricing and underwriting capabilities; the joint progress of different sectors will also promote the recovery and development of the traditional economy and the new economy. From this perspective, while waiting for the signal of regulatory policy relaxation, improving its own strength and building high-quality investment banks will become the "mandatory" path for the development of securities firms.
Proprietorship Investment Becomes the Key Breakthrough for PerformanceThe current revenue from securities firms' proprietary businesses still largely depends on the performance of the stock and bond markets. The significant divergence in the performance of stocks and bonds has increased the difficulty of asset allocation across major categories. Market volatility and divergence are likely to continue, further increasing the difficulty of obtaining investment returns. The sustained violent fluctuations in the equity market have further increased the difficulty of asset allocation for securities firms' proprietary businesses. The ability to allocate assets and risk control will become the "key to success or failure" for future securities investments.
Analyzing the performance in recent years, the proprietary investment returns of small and medium-sized securities firms are more affected by market fluctuations, while the profitability of leading securities firms is relatively more certain. This is due to the more balanced asset allocation of leading securities firms, with some firms firmly adopting a "non-directional investment" attitude and having accumulated relatively rich practical experience. At the same time, leading securities firms have the ability to delve into the over-the-counter derivatives market and overseas markets, and have more means of risk diversification and hedging, which to some extent hedges the impact of the domestic equity market. However, if one can better predict the performance of various assets and more efficiently make reasonable choices among equity assets, fixed income assets, and commodity assets, it could be the "masterstroke" for proprietary investment performance and even the performance of securities firms to overtake.
In addition to actively allocated equity and fixed income assets, direct investment business is an important source for securities firms to obtain long-term, high IRR. Securities companies mainly engage in equity investment, underwriting project co-investment, and financial product investment through direct investment, venture capital, and alternative investment subsidiaries. Under the full registration system, the channels for "raising, investing, managing, and exiting" are expected to be more smooth, and the exit channels for equity investment are further expanded, which is conducive to the realization of investment returns. Moreover, securities companies' active participation in equity investment is expected to achieve full-process coverage of enterprises at different stages of life cycle, and to explore customer value through the joint efforts of various departments.
Therefore, under the current trend of changes in the business structure of securities firms, the continuously increasing scale means that the stability and sustainability of proprietary investment have become key factors in determining investment performance and even the overall performance of securities firms. Although proprietary investment has become a key breakthrough for securities firms to improve profitability and surpass comparable peers, in the face of violent fluctuations in the stock and bond markets, blindly expanding the scale of proprietary business is not advisable. Stability is also an important consideration for the quality of business capabilities, and it is necessary to achieve a dynamic balance between high beta and stable growth. At present, some leading securities firms with more balanced proprietary asset allocation, strong allocation capabilities, relatively sound risk control systems, and the ability to delve into the over-the-counter derivatives market and have many means of risk hedging have stronger performance certainty and have certain counter-cyclical attributes.
From an investment perspective, the core focus of the current securities industry is still on the wealth management main line and the performance elasticity of investment-type businesses in the recovery of the equity market. However, considering the high volatility of the market in recent years and the relatively limited means of risk hedging, wealth management and asset management businesses will continue to increase the importance of such businesses in the business pattern of securities firms while raising the lower limit of securities valuation and smoothing valuation fluctuations.
At the current point, the acceleration of capital market reforms represented by the registration system is expected to become a direct catalyst for the value return of the securities industry. Business innovation will also open up imagination space for profit growth, and the medium and long-term development prospects of the industry continue to be positive. However, due to the business structure and operational attributes, the "market beta" characteristics of the industry have not changed significantly, and the long-term downturn of the market has formed a strong suppression on the industry's performance and valuation.
In addition, due to its own special attributes, the securities industry will not only directly benefit from favorable policies of the industry, but also indirectly benefit from the recovery of the macro economy and the introduction of various policies that are favorable to the entire market. Under the policy tone of protecting the rights and interests of small and medium investors, enhancing the sense of gain for investors, and stabilizing the market, there is still a "policy red envelope" to look forward to in the second half of the year. After nearly three years of fluctuating downward, the current PB valuation of the securities industry has dropped to 1.11 times, which is at a very low position of 1.65% in historical valuations, and the upward elasticity is much greater than the downward space.
In addition, under the clear regulatory guidance, the frequency and intensity of industry consolidation in the securities industry in 2024 are expected to increase, and the cycle is expected to be shortened. Among them, top-down promotion is expected to become the leading force. At present, there are integration expectations for Minsheng & Guolian, Huachang & Pacific, Zheshang & Guodu, Ping An & Fangzheng, and the transfer of control rights of Dongguan Securities is also expected to receive widespread attention from the industry and the market.
Based on the above analysis, in the second half of the year, we continue to be optimistic about the investment opportunities of leading institutions in the securities industry under the medium and long-term innovative development model. The targets with high investment value are still concentrated in value stocks with low valuations. At the current point, the investment value of securities ETFs needs to be particularly valued. Referring to overseas experience, as market efficiency gradually improves, market preferences may continue to tilt towards index investment.
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