Fitch Ratings pointed out in a newly released research report that since regulators have always strictly set risk control index calculation standards for innovative businesses and high-risk businesses to avoid unexpected large losses, Chinese securities companies generally maintain low capital allocations in a sluggish market situation, which helps the industry's leverage ratio to remain low and basically stable despite weak returns. As of the end of the first half of 2024, the total leverage ratio of the securities industry was 3.3 times. Fitch expects securities companies to maintain a conservative use of leverage in a challenging market environment. At the same time, Fitch pointed out that leading companies in the industry are actively expanding asset management business to increase the degree of business diversification, thereby improving the quality of profits. Although the share of asset management business is still low, the revenue contribution to the top ten leading brokerage firms is higher, reaching 13%. Fitch expects this contribution to gradually increase as these companies are expanding their asset management business by applying for their own licenses and holding shares in fund companies to benefit from the trend of shifting household wealth allocation from real estate investment to other sectors. Fitch also anticipates that the continuous evolution of the regulatory environment and continued industry integration will promote the further hierarchical development of the securities industry. Financial reforms aimed at promoting direct financing and strengthening capital market order may bring more business opportunities to securities companies and improve their risk management infrastructure. Leading securities firms are more likely to benefit from these trends.

Fitch Ratings pointed out in a newly released research report that since regulators have always strictly set risk control index calculation standards for innovative businesses and high-risk businesses to avoid unexpected large losses, Chinese securities companies generally maintain low capital allocations in a sluggish market situation, which helps the industry's leverage ratio to remain low and basically stable despite weak returns. As of the end of the first half of 2024, the total leverage ratio of the securities industry was 3.3 times. Fitch expects securities companies to maintain a conservative use of leverage in a challenging market environment. At the same time, Fitch pointed out that leading companies in the industry are actively expanding asset management business to increase the degree of business diversification, thereby improving the quality of profits. Although the share of asset management business is still low, the revenue contribution to the top ten leading brokerage firms is higher, reaching 13%. Fitch expects this contribution to gradually increase as these companies are expanding their asset management business by applying for their own licenses and holding shares in fund companies to benefit from the trend of shifting household wealth allocation from real estate investment to other sectors. Fitch also anticipates that the continuous evolution of the regulatory environment and continued industry integration will promote the further hierarchical development of the securities industry. Financial reforms aimed at promoting direct financing and strengthening capital market order may bring more business opportunities to securities companies and improve their risk management infrastructure. Leading securities firms are more likely to benefit from these trends.