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on the evening of september 5, two leading domestic securities firms announced their merger. according to the 2023 annual report data, if the two companies complete the merger and reorganization, their combined total assets will reach 1.68 trillion yuan, and their combined net assets will reach 348.2 billion yuan, both ranking first in the securities industry. how do you view the impact of the "strong alliance" of my country's first leading securities firm on the overall securities sector?

the merger transaction between the two major securities firms involves multiple business licenses and a number of domestic and overseas listed subsidiaries. it is the largest absorption merger in the history of china's capital market and the largest integration case of a-share and hong kong-listed securities firms.

（1) open up the imagination space for optimizing the structure of the securities industry: since the "opinions on building a first-class investment bank" proposed a "three-step" plan for the construction of the securities and fund industry and the new "nine national articles" reiterated "supporting leading institutions to enhance their core competitiveness through mergers and acquisitions, restructuring, organizational innovation and other means", this first merger and restructuring of leading securities firms has further opened up the imagination space for the improvement of concentration in the securities industry, and the advantages of leading securities firms may be accelerated.

combined with the current tightening of securities firms’ financing supervision and the previousform2to3an investment bank and investment institution with international competitiveness and market leadershipfrom the perspective of the policy goal of ", the merger and reorganization among the leading securities companies is expected to enhance theinternational competitiveness。

（2)rightbrokerage sectoroverall, a new wave of mergers and acquisitions may have arrived: from a policy perspective, regulators have frequently spoken out about "cultivating first-class investment banks and investment institutions", the pace of equity refinancing for listed securities firms has tightened, and peer mergers and acquisitions have become a better way for securities firms to grow bigger and stronger.

figure: historically, the valuation of securities companies has a high positive correlation with roe

(information source: western securities)

from the supply side, industry concentration remains high.top brokerage firmsROEthe advantages are obvious. the willingness of shareholders of small and medium-sized securities companies to sell their shares has increased. industry integration is conducive to the joint valuation of both parties in mergers and acquisitions.。

from the demand side, the scale of domestic securities firms is still difficult to compete with overseas leading investment banks. expanding scale through mergers and acquisitions and restructuring may be a feasible way to enhance international competitiveness.

（3) build a world-class investment bank: from a macro perspective, we know that investment banking is one of the core businesses of securities companies, and investment banking business that supports the real economy is increasingly becoming an important development direction for major securities companies.

throughout the history of global economics and finance, the development of investment banks has always been closely linked to the process of national modernization and the construction of international financial centers. major international financial centers around the world all have a number of financial institutions with significant international influence. compared with mature markets such as the united states, there is still a clear gap in the scale and profitability of my country's securities industry.

the benefits of mergers and acquisitions to both parties lie in the synergy effectthe two leading securities firms mergedthe two parties have their own characteristics in terms of business structure, risk management, digital technology, customer resources, etc. the merger will form a stronger comprehensive strengthafter the merger, the new institution's various businesses will be comprehensively upgraded, in line with the goal of building a world-class investment bank as set out in an important financial work conference, and better supporting the real economy.

（4) two“shanghai securities company merger promotes construction of shanghai international financial centeror helpoptimizing the layout of shanghai's state-owned financial assets：as my country's international financial center, shanghai urgently needs to build a world-class investment bank, and the merger and reorganization of leading securities firms is an effective way. at the same time, this merger may also help optimize the layout of shanghai's financial state-owned assets and make state-owned capital stronger, better and bigger.

at present, shanghai is making great efforts to deepen the construction of the "five centers" and accelerate the construction of a socialist modern international metropolis with global influence. as one of the important pillars of shanghai's local economy, shanghai's state-owned assets and state-owned enterprises have actively responded, taking the new round of state-owned enterprise reform as an opportunity to further optimize the layout of state-owned assets.dostrongoptimize and expand state-owned capital and state-owned enterprises。

in this context, the merger and reorganization of the two leading securities firms will not only be conducive to the large-scale development of state-owned assets, but also help lay the foundation for boosting corporate market value and maintaining and increasing the value of state-owned assets.

overall, mergers and acquisitions may be one of the biggest investment themes for the securities sector this year.first domestic ordertop brokerage firms“the merger further opened up the valuation imagination space of the securities sector. you can focus on the brokerage etf (159842) with the lowest comprehensive fee rate in the entire market!

risk warning

dear investors: investment involves risks and investment requires caution. publicly offered securities investment funds (hereinafter referred to as "funds") are a long-term investment tool whose main function is to diversify investments and reduce the individual risks brought by investing in a single security. funds are different from financial instruments such as bank savings that can provide fixed income expectations. when you purchase fund products, you may share the income generated by the fund investment according to the shares held, and you may also bear the losses brought by the fund investment.

before making an investment decision, please carefully read the fund contract, fund prospectus, fund product information summary and other product legal documents and this risk disclosure book, fully understand the risk-return characteristics and product characteristics of the fund, carefully consider the various risk factors of the fund, and fully consider your own risk tolerance based on your own investment objectives, investment period, investment experience, asset status and other factors. on the basis of understanding the product situation and sales suitability opinions, make rational judgments and make investment decisions prudently. in accordance with relevant laws and regulations, yinhua fund management co., ltd. makes the following risk disclosures:

1. based on different investment objects, funds are divided into different types such as stock funds, mixed funds, bond funds, money market funds, funds of funds, commodity funds, etc. you will get different expected returns and bear different degrees of risks when investing in different types of funds. generally speaking, the higher the expected return of the fund, the greater the risk you bear.

2. funds may face various risks during investment operations, including market risks, as well as the fund's own management risks, technical risks and compliance risks, etc. large-scale redemption risk is a risk unique to open-end funds, that is, when the net redemption application of a fund on a single open day exceeds a certain proportion of the total fund shares (10% for open-end funds, 20% for periodic open funds, and excluding special products specified by the china securities regulatory commission), you may not be able to redeem all the fund shares you applied for in a timely manner, or the amount you redeemed may be delayed.

3. you should fully understand the difference between regular fixed-amount fund investment and savings methods such as lump-sum savings. regular fixed-amount investment is a simple and easy investment method that guides investors to make long-term investments and average investment costs, but it cannot avoid the risks inherent in fund investment, cannot guarantee investors' returns, and is not an equivalent financial management method to replace savings.

iv. risk disclosure of special types of products: investors are advised to pay attention to the risk of fluctuation of the underlying index and the unique risks of etf (exchange traded fund) investment. this fund will invest in stocks under the hong kong stock connect, and needs to bear exchange rate risks, and face unique risks brought about by differences in investment environment, investment targets, market systems and trading rules under the hong kong stock connect mechanism.

5. the fund manager promises to manage and use the fund assets in accordance with the principles of honesty, good faith, diligence and responsibility, but does not guarantee that the fund will make a profit or guarantee a minimum return. the past performance of the fund and its net value do not indicate its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. yinhua fund management co., ltd. reminds you of the "buyer beware" principle of fund investment. after making an investment decision, the investment risks caused by the fund's operating conditions and changes in the fund's net value shall be borne by you. the fund manager, fund custodian, fund sales agency and related institutions do not make any promises or guarantees about the fund's investment returns.

vi. the above funds are raised by yinhua fund in accordance with relevant laws, regulations and agreements, and are registered with the permission of china securities regulatory commission (hereinafter referred to as "csrc"). the fund contract, fund prospectus and fund product information summary of the fund have been publicly disclosed through the csrc fund electronic disclosure website [http://eid.csrc.gov.cn/fund/] and the fund manager's website [www.yhfund.com.cn]. the registration of the fund by the csrc does not mean that it has made a substantive judgment or guarantee on the investment value, market prospects and returns of the fund, nor does it mean that there is no risk in investing in the fund.

source: financial times