A few months ago, when listed brokers unveiled their 2025 annual reports, I dove deep into the numbers, eventually producing my analysis titled "The New Landscape of 2026 Securities Industry: Twin Peaks, Eight Powerhouses, and the Rest." The driving force behind that piece was a curiosity about whether financial data could truly explain the current structure of the brokerage sector. However, upon completion, it became clear that relying solely on static data for peer comparison only helps identify which metrics to examine. The real shifts in the industry's competitive dynamics, barring occasional headline-grabbing mergers, are largely concealed within the changes visible through dynamic, period-over-period data comparisons.

Conveniently, listed brokers have just released their 2026 interim reports. While semi-annual reports are less detailed than annual ones, they offer enough information to analyze trend changes using comparative data from the first half of this year against the previous year's figures. After finishing this new analysis and re-reading my earlier piece, a familiar saying from a veteran industry figure echoed in my mind: "It's not entirely wrong, but it's certainly not entirely right either." The lessons imparted to me by this senior figure, I now find myself passing on to you.

Between the Twin Peaks: A Gaze Across the Distance and Ambitions Beyond

The notion of "not bad compared to the best, but better than the rest" essentially doesn't exist in the securities industry, at least not in official strategy documents or upward reports. It might surface in casual banter between colleagues but never as a strategic consideration. So, when the mid-year reports still clearly show the industry's twin peaks as CITIC Securities and Guotai Haitong, the core question dominating their thoughts remains the same: who is the true industry leader? If we apply the industry's "first law" – that capital strength trumps all – then the answer might be the one media headlines have been shouting: "The Industry's Number One Has Changed."

Looking back over an 11-year horizon, CITIC Securities is the only firm to have achieved semi-annual net profits exceeding RMB 10 billion seven times. This latest interim report shows CITIC Securities posting H1 revenue of RMB 49.692 billion and net profit attributable to shareholders of RMB 23.343 billion, both comfortably ahead of Guotai Haitong's RMB 47.163 billion in revenue and RMB 20.260 billion in net profit. Yet, when examining the balance sheet strength as of the end of June, Guotai Haitong now claims the top spot in capital terms, with total assets of RMB 2.5022 trillion and net assets attributable to shareholders of RMB 373 billion, surpassing CITIC Securities' RMB 2.4699 trillion in total assets and RMB 351 billion in net assets. However, for two firms with total assets exceeding RMB 2 trillion, revenue approaching RMB 50 billion, and profits surpassing RMB 20 billion, does a gap of RMB 20-30 billion in capital or a few billion in revenue and profit truly constitute a competitive advantage in the battle for supremacy? Absolutely not. For either of these twin peaks, such margins could be bridged or widened by a single significant expense or an accounting adjustment.

The genuine leader remains firmly entrenched in the lead reflected by specific business metrics. For instance, in proprietary trading, CITIC Securities generated H1 self-operated income of RMB 26.927 billion, far exceeding Guotai Haitong's RMB 23.851 billion. In asset management, CITIC Securities also leads by a landslide with RMB 7.182 billion in income, the only firm achieving such a commanding lead in this segment. Meanwhile, Guotai Haitong's RMB 3.710 billion in asset management revenue placed only third, behind GF Securities (RMB 4.840 billion). These are the significant competitive advantages. This is crucial because proprietary trading remains the industry's primary revenue pillar, generating far more income than brokerage, investment banking, or asset management. Given that both CITIC Securities and Guotai Haitong possess similar capital strength and adopt similarly prudent investment strategies, the divergent results in this key area translate into leading efficiency metrics. CITIC Securities' weighted ROE of 7.81% still crushes Guotai Haitong's 6.12%.

Nevertheless, the gap between the two titans is undeniably narrowing. Since Guotai Haitong's merger was finalized a year and a half ago, they have proceeded methodically, integrating their asset management, alternative investment, and private equity subsidiaries. Their H1 figures show 40.89 million domestic clients and 6,332 registered investment advisors, both leading the industry, and they also hold the top market share in both equity and margin trading. Consequently, in the retail brokerage business, Guotai Haitong's H1 income of RMB 9.942 billion has slightly edged past CITIC Securities' RMB 9.856 billion, making it the new industry leader in this segment. Furthermore, in investment banking, Guotai Haitong has forced its way into the traditionally dominant top four (the "Three CICC-affiliated firms and one other"), achieving the third position with income of RMB 2.224 billion and IPO underwriting volume of RMB 10.683 billion. In a sector characterized by rapid capital concentration and business homogeneity, capital strength can now negate advantages in institutional framework, resources, or expertise. When two equally massive peaks face each other, the one that can move with the agility of a cheetah despite its elephantine size will occupy the true number one position. So who is the real leader? At least until Guotai Haitong fully digests its merger, the answer remains clear. Of course, in the minds of the executives at these two firms, their true competition might already be beyond each other. CITIC Securities aspires to be a leading domestic investment bank with global reach, trusted by clients worldwide, while Guotai Haitong aims to be a first-class investment bank with international competitiveness and market influence. These similar visions reveal that while their executives may be looking at each other, their ambitions are set on the distant likes of Goldman Sachs and Morgan Stanley.

As for the remaining hundred-plus firms at the feet of these twin peaks, their story is quite different. Chasing the top two is no longer a viable strategic option. Their most pressing mission is to avoid falling behind in the ranking race and becoming a target for acquisition. The brutal reality of this ranking war is most acutely felt by the remaining eight firms in the top ten.

An Industry's Anxiety Centered on the "Top Eight"

In my previous annual report analysis, I ranked the top ten brokers by asset size, revenue, and net profit, resulting in three nearly identical lists. This perfectly mirrors a well-known industry reality: brokerages offer largely homogenous services, and there is no fundamental difference in return on assets or equity. Asset, revenue, and net profit figures are therefore all stably correlated. For minor discrepancies between revenue and net profit rankings, which I touched upon in my podcast discussion, the key drivers are differences in cost structures. For example, larger firms may experiment with businesses that have lower profit margins for strategic reasons, leading to larger gaps in revenue than in net profit. More significantly, differences in personnel costs – where compensation per employee can differ by tens of thousands of RMB, multiplied across a workforce of thousands – easily translate into billions of RMB in profit differences, further skewing revenue versus net profit standings.

Since the interim report lacks the detailed employee and cost data found in annual reports, I will focus on the changes in revenue rankings over the past six months to gauge competitive developments. The revenue ranking from the 2025 annual reports was: CITIC Securities (RMB 74.9 billion), Guotai Haitong (RMB 63.1 billion), Huatai Securities (RMB 35.8 billion), GF Securities (RMB 35.5 billion), CICC (RMB 28.5 billion), China Galaxy Securities (RMB 28.3 billion), China Merchants Securities (RMB 25 billion), Shenwan Hongyuan (RMB 24.3 billion), Guosen Securities (RMB 24.1 billion), and CSC Financial (RMB 23.3 billion). Now, the 2026 interim report ranking looks like this: CITIC Securities (RMB 49.7 billion), Guotai Haitong (RMB 47.2 billion), GF Securities (RMB 26.9 billion), Huatai Securities (RMB 23.7 billion), China Merchants Securities (RMB 21.9 billion), CICC (RMB 19.3 billion), China Galaxy Securities (RMB 16.9 billion), CSC Financial (RMB 16.2 billion), Shenwan Hongyuan (RMB 13.8 billion), and Guosen Securities (RMB 12.6 billion). The fierce nature of this competitive race is clear: while the top two spots remained static, the battle for the other positions was intensely dynamic.

The most significant shift in just six months is that GF Securities and Huatai Securities have swapped the third-place position. This was foreshadowed by their mere RMB 300 million difference in the annual figures. Now, GF Securities has not only overtaken its rival by RMB 3.2 billion in revenue, but its net profit of RMB 11.652 billion trails Huatai Securities' RMB 11.692 billion by only a few tens of millions, effectively solidifying its new status. What’s driving GF Securities’ rising? Aside from its broadly strong operations, the primary catalysts are likely its proprietary trading and asset management arms. With self-operated income of RMB 13.1 billion, it ranks third in the industry behind the twin peaks, and its RMB 4.8 billion in asset management income has allowed it to surpass Guotai Haitong and claim the second spot in that segment. Barring any unforeseen events in the second half, the third position seems secure for GF Securities. Of course, a potential challenge could come from the merged CICC rather than Huatai Securities.

But the clearest surprise in the first half was the rise of China Merchants Securities, which leapfrogged both CICC and China Galaxy Securities. A close look at their segment data points to their proprietary trading success. China Merchants Securities generated RMB 12.9 billion in self-operated income, ranking fourth in the industry, and more importantly, its 213% year-on-year growth was the highest among the top ten. This performance drove its overall revenue up by 108% year-on-year to RMB 21.9 billion, catapulting it from seventh to fifth place in just six months.

However, the ranking war presents cruelty not just through change, but also through stagnation. Our comparison shows that besides the twin peaks, stability also characterizes the bottom trio of the top ten: CSC Financial, Shenwan Hongyuan, and Guosen Securities. Interestingly, last year’s eighth-place finisher, Shenwan Hongyuan, was practically on par with seventh-place China Merchants Securities, suggesting these four firms could be classified as a single competitive group. Now, however, CSC Financial (now eighth) and China Galaxy Securities (now seventh) are grouped together, having been left behind by the top six and yet still pulling away from the bottom two. So is it a problem with China Galaxy Securities, or is it a shared dilemma for Shenwan Hongyuan and Guosen Securities? Revenue growth figures from the interim reports tell a similar story: China Galaxy Securities (22.58%), Shenwan Hongyuan (18.31%), and Guosen Securities (13.40%) occupy the 8th, 9th, and 10th spots for this metric. But the source of struggle varies across the trio. Shenwan Hongyuan’s H1 asset management income of RMB 357 million has fallen to 16th in the industry. China Galaxy Securities sees its asset management (RMB 173 million) and investment banking (RMB 338 million) divisions ranking 20th and 17th, respectively. Guosen Securities, while holding its fifth-place position in brokerage thanks to a strong foundation, fails to place in the top ten for investment banking, proprietary trading, or asset management. This, perhaps, is the true cruelty of being an "eight powerhouse": the certainty that catching the twin peaks is unattainable. Even with comprehensive business development and maximum effort, the best outcome without outside influence is just shuffling positions within the group of eight, while any weakness or complacency could open the door for newer players to break in.

Going Global and AI: New Outfits for the Same Old Titans

In my previous analysis of annual reports, I hypothesized that the "newcomers" challenging the status quo would emerge through overseas expansion or AI adoption. After all, terms like "cross-border business" and "technology empowerment" were ubiquitous in the 2025 annual reports. I had reasoned that since the top ten had locked down the four traditional pillars – brokerage, proprietary trading, investment banking, and asset management – through sheer capital and client heft, the only new paths forward were expanding physical boundaries abroad and reshaping business logic internally with AI. However, the first half of 2026 has proven this prediction to be an old ending rather than a new beginning. For example, interim data show that the ranking for overseas revenue from parent companies is led by the usual suspects: CITIC Securities (RMB 11.8 billion), CICC (RMB 5.9 billion), Guotai Haitong (RMB 5.4 billion), and Huatai Securities (RMB 4.4 billion), with years of accumulated advantages keeping them at the forefront. Beyond this top four, only fifth-place GF Securities (RMB 2.2 billion) and sixth-place China Galaxy Securities (RMB 1.7 billion) show potential for creating a new growth curve from overseas ventures. GF Securities has been aggressively injecting capital over the past two years with rapid growth, while China Galaxy Securities leverages its strong Galaxy International and its dominant position in Southeast Asia. Both are trailing the leaders but have established a clear gap from the pack, where all other firms have overseas revenue under RMB 1 billion. This is unsurprising. Internationalization follows the same three variables: capital, clients, and expertise. Capital determines entry, clients determine viability, and expertise determines sustainability. When only the leading firms possess the capital to go global, and the early movers capture the clients and hone their expertise, this new race, however long, is likely to remain a contest among the top ten.

The same applies to the technological path, which has also been played for years. My criticism in the annual report analysis – that the only visible "tech empowerment" was in slogans and sponsored content – still holds for the interim reports. But driven by curiosity, I recently spoke with peers in the fintech sector, leading to the widely circulated piece on the lack of visible AI application development in the industry at WAIC. That article focused on the technology landscape; the consequential industry dynamics I saved for this discussion. For instance, the true leaders in financial technology are not the twin peaks but the "Twin Tai's": Huatai Securities and Guotai Haitong. This isn't just because of their loud "All in AI" proclamations, but due to a less-publicized fact revealed by their peers: these are the only two firms in the entire industry with truly native AI applications. An even more significant undisclosed truth is that the development landscape in fintech is even more concentrated at the top than the capital-driven business rankings, displaying a form of K-shaped divergence. Brokers are essentially divided into three tiers in their fintech development. The first tier comprises seven leading firms: Huatai Securities, Guotai Haitong, CITIC Securities, GF Securities, CICC, East Money, and China Merchants Securities. These seven have constructed complete AI ecosystems, from strategy, systems, and talent to tools like inference engines, agent orchestration, and workspaces. Among them, the two "Twin Tai's" lead the remaining five through their proprietary vertical large language models. The second tier includes some firms within the top 20, such as China Galaxy Securities, Guosen Securities, CSC Financial, Shenwan Hongyuan, and Ping An Securities. These firms have limited proprietary computing power but have developed some mature AI vertical tools with leased capacity, yet they lack the closed-loop system of the first tier. All other brokers fall into the third tier, a classification simply explained by their peers: these companies are mostly "all talk" in fintech. Insiders point out that many haven't even completed the foundational data cleaning and data lake construction required by the previous tech era. Since the most valuable asset for AI is proprietary data, many so-called AI initiatives are merely superficial shells.

From an outsider's perspective, brokerages' fintech strength is not like their business segments, easily quantifiable by performance data. This is because technology follows business in this industry, not the other way around, making cost data from annual reports the only true reflection of their fintech investment. Investing in fintech boils down to three major areas: hardware, software, and human resources. Hardware means servers and, more recently, expensive AI compute cards, leading to the recent war-chest stories. Software includes annual subscriptions for information and data, plus the continuous development of hundreds of systems – one contact at a mid-sized listed brokerage mentioned they have over 800 systems. Human capital is the most substantial cost. Huatai Securities, for instance, has over 3,000 IT employees and an entire office building dedicated to 6,000 outsourced staff, yet still needs to collaborate with tech giants on certain projects due to talent shortages. Given the massive capital required for compute cards, data cleaning, and algorithm training, most brokers cannot compete in this tech arms race. 2025 annual report data highlights this concentration, with Guotai Haitong leading industry IT spending at RMB 3.2 billion, followed by Huatai Securities at RMB 2.7 billion (CITIC did not disclose). But even if a firm wins a stage of this race, the speed of technological development means any leadership position is fleeting. One reason only the "Twin Tai's" have proprietary models is their early investment; another is that others are discovering that buying and fine-tuning general large models is already more cost-effective than building from scratch. It's worth noting that the fintech community doesn't view the "Twin Tai's" as foolish spenders gambling for the industry; rather, they are seen as the few committed players genuinely using technology to lead. In this arena, computing power and quality data are just expensive entry tickets. To become a true industry veteran, even the largest firms require years of dedicated investment. Therefore, while overseas expansion and AI are indeed new growth vectors, they are more likely to be new clothes worn first by the existing titans, and they won't be easily taken off.

As we reach the halfway point of 2026, the numbers left by the interim reports are more significant than many might expect. The revenue and profit figures, measured in tens of billions of RMB, are dominating financial media coverage, looking like invitations to a grand celebration. But I can't help but wonder if these invitations are extended to the industry's own practitioners. Perhaps the full details in the more comprehensive annual reports later this year will reveal the true good news. I will certainly be continuing my analysis then. For now, consider this piece my own impromptu song at the feast, echoing the sentiment: "This district was once worthy of being called a paradise."