Hong Kong brokerages will not be revalued together, but will be re-stratified.

The answer is no longer just the securities license, but the capital, clients, products, systems, and compliance organization behind the license. My judgment is that Hong Kong brokerages will not be revalued together simply because the market warms up. Only if scale can be translated into client asset retention, product cross-selling, and higher risk-adjusted returns will industry stratification continue; if that translation does not happen, neither capital top-ups nor low P/B can change the valuation logic.

The market is back, and the first thing to increase is the demand for capital

In the first half of 2026, the average daily turnover of Hong Kong stock spot reached HKD 283 billion, up 17.8% year-on-year; IPO fundraising reached HKD 210.2 billion, up 92.1% year-on-year; and the average daily southbound turnover reached HKD 123.1 billion. The market was more active than in previous years, naturally providing brokers with more commissions, underwriting, and financing opportunities.

But in active markets, what gets scaled up first is often balance sheet demand. Margin trading requires funding, derivatives and market making require capital, prime brokerage for institutions requires financing and risk control capabilities, and cross-market settlement also requires liquidity. Once businesses go online, IT, anti-money laundering, customer suitability, and system stability won’t disappear just because there are no physical branch offices.

CITIC Securities’ capital increase provides direct evidence. On August 6, it completed the issuance of 803.7 million H-shares, raising a net of approximately HK$18.413 billion, corresponding to the previously approved RMB 16 billion fundraising scale. All funds were retained offshore and used to develop international business, with directions previously announced including cross-border and offshore equity derivatives, commodities, and fixed income capital intermediary businesses.

This is not simply a matter of “the market is hot, so let’s hire more brokers.” Competition among international brokerages is increasingly dependent on the combined capabilities of the balance sheet, risk systems, and client relationships. Insufficient capital will directly block business growth; having capital in place only secures the qualification to enter the field, but does not automatically solve the return-on-equity problem.

Breaking NAV May Be a Discount, or It May Be the Answer

To judge whether a brokerage is cheap, you can’t just look at PB being less than 1.

In a framework of steadily growing simplified residual income:

ROE is the long-term sustainable return on equity, g is the long-term growth rate, and r is the cost of equity capital. In this simplified model, setting g to zero yields the approximation PB = ROE / cost of capital.

If a brokerage firm can only sustain a 5% ROE over the long term while investors demand a 10% return, then assuming no growth, a 0.5x P/B is not unreasonable. If it repeatedly raises capital to expand a low-return business, growth may even continue to erode value. In reality, one must also consider earnings volatility, asset quality, financing costs, dividends, and regulatory risks, so a “0.6x P/B” in itself is not an investment rationale.

The proposed privatization of Guotai Junan International illustrates the other side perfectly. The offer price of HKD 3 represents a 44.2% premium over the last closing price before the trading halt. Based on approximately 9.53 billion issued shares as of the announcement date, the corresponding equity value is roughly HKD 28.59 billion; compared with shareholders’ equity of approximately HKD 15.859 billion at the end of 2025, the static ratio is about 1.8x PB. Since the parent company already holds a majority stake, this equity value does not equal the actual cash the offeror needs to pay.

It is not a typical case of “a 0.5x PB small broker being scooped up.” Guotai Junan International’s 2025 ROE stood at 8.7%, and the offer price may also reflect the synergy value of group integration, control rights, and reduced friction across listed platforms. This case demonstrates that the controlling-stake market and the listed minority-stake market can assign different prices, but it does not prove that every broker trading below book value will receive a 44.2% premium.

A valuation repair requires verifying several things at the same time: a rising sustainable ROE, capital being deployed toward more efficient uses, asset quality not being sacrificed for growth, and the market not yet fully reflecting these changes. A low P/B is only the starting point, not the answer.

What Ant Group Bought Is a More Advanced Starting Point

Antfin Associates initially purchased approximately 50.55% of Yaocai’s shares for HK$2.814 billion, with the transaction completed on March 30, 2026; after the expiration of the general offer, the buyer and parties acting in concert hold approximately 50.63%.

Building a Hong Kong brokerage from scratch is never just about applying for a license. It also requires establishing account opening, trading, financing, clearing, anti-money laundering, customer service, and complaint handling processes, and then convincing customers to transfer real money in. What Ant acquired was a locally functioning organization and customer entry point, as well as the time needed to build these capabilities.

This deal therefore carries the imagination of a revaluation, but the fact that “Ant has traffic” cannot be directly translated into “Yaocai has customers”. Whether payment users need Hong Kong and US stocks and wealth management, whether customers are willing to migrate their assets, and whether product integration can pass the regulatory requirements of Hong Kong and other markets are all questions that only begin to be answered after the completion of the change of control.

If the integration succeeds, the revenue structure of the broker could extend further from trading commissions and margin financing into funds, bonds, cash management, and cross-border wealth management, and valuation methods would shift with client asset retention and recurring revenue. If integration stops at rebranding, interface changes, and marketing subsidies, it would remain a traditional brokerage with an additional strong shareholder.

So Ant didn’t buy a finished path; it only bought a starting point that was further ahead than starting from zero—applying for licenses, building systems, and finding customers. The subsequent organizational integration and trust migration still cannot be purchased all at once with capital.

What Makes Futu Leading Is Not a Trading Interface

The gap at Futu is now visible in operating figures. As of the end of March 2026, it had 3.59 million asset-holding clients and HK$1.22 trillion in client assets, with client assets up 47% year-on-year; total trading volume in the first quarter reached HK$4.15 trillion, up 29% year-on-year; wealth management assets stood at HK$178.4 billion, up 28% year-on-year. Of the HK$5.9 billion in total revenue over the same period, brokerage commissions and fees contributed HK$2.64 billion, and interest income contributed HK$2.65 billion.

These figures are enough to demonstrate the scale of operations and growth, yet they cannot alone establish a causal relationship between each product. The platform mechanism still deserves attention: quotes, news, community, trading, financing, options, funds, and cash management drive traffic to one another within the same account. The longer assets are retained, the more opportunities the platform has to offer financing and wealth products; the richer the product lineup, the more likely customer acquisition and technology investment can be amortized across a larger asset base.

Latecomers can replicate the interface and commission pricing, but it is difficult for them to quickly replicate the trust, data, and product distribution foundation formed by HK$1.22 trillion in client assets. More accurately, Futu has verified that the platform model can be operated at scale, rather than proving that this model can be replicated as-is in any region, traffic channel, or regulatory environment.

Scale also amplifies compliance responsibilities. On May 27, 2026, the China Securities Regulatory Commission issued a prior notice of administrative penalty to the relevant entities of Tiger Brokers, Futu, and Long Bridge, both domestic and overseas, involving illegal cross-border business operations. As of the verification date of this article, this is still a prior notice procedure and cannot be written as if the penalty has been concluded; however, it has already shown that the old growth path of relying on mainland China’s internet traffic to directly convert into Hong Kong securities accounts is subject to significant constraints.

The Followers Are Not Chasing the Same Futu

After Futu, there were indeed several followers, but they did not line up and chase along the same path.

Internet platforms such as Tiger and Long Bridge face the challenge of how to continue acquiring customers in different licensed markets while converting trading users into long-term asset clients. The CSRC’s advance notice indicates that they can no longer treat domestic cross-border customer acquisition as a growth channel without boundaries. When comparing these platforms in the future, one should not only look at new account additions and subsidies, but also at where customers come from, how long their assets are retained, and whether wealth products can generate recurring fees.

Ant Group and Bright Smart are taking a different path: rather than building an internet broker from scratch, they are leveraging technology and a financial ecosystem to transform an existing licensed broker with a local operational foundation. This approach may shorten the system-building and initial customer acquisition timeline, but at the cost of having to manage the integration between legacy organization, legacy customers, and new products.

Comprehensive financial groups like CITIC and Guotai Haitong don’t need to compete with Futu for the same set of customers in every retail scenario. Cross-border investment banking, derivatives, prime brokerage, corporate financing, and high-net-worth wealth management rely more on capital and institutional relationships. Their “following” of Futu is more akin to learning digital customer operations rather than copying a retail trading app.

The available material is insufficient to rank a stable second or third place among these players. What can really be compared are three catch-up paths: internet platforms expanding across regions, tech ecosystems transforming traditional brokerages, and conglomerates extending institutional capabilities into digital wealth management. Who breaks out will depend on client assets and returns on capital—not on who looks most like Futu.

Four Models Will Follow Different Valuation Tracks

The categories below are not mutually exclusive industry maps, but rather a set of observation frameworks. The same brokerage firm may span two categories of business simultaneously.

Futu has already pulled clearly ahead on the first path. Ant and Yao Tsai represent a transformation worth watching within the second category. Large groups are competing more for institutional and corporate clients. For small brokers with low ROE and a lack of customer and product differentiation, trading below book value will not automatically lead to a re-rating; only those companies that have transferable customers, distinctive teams, reliable systems, or a clean asset base may be able to reflect control value. Other companies may choose to specialize, merge, exit, or continue operating at low valuations. These are conditional branches, not quantitative predictions that can be derived from three transactions.

When observing this industry, I track five sets of metrics: client assets rather than just account numbers; sustainable and risk-adjusted ROE; the quality of recurring fees, interest income, and cyclical trading revenue in wealth management; the specific destinations of new capital and its cost of financing; and the source of clients along with their regulatory boundaries. Only when these metrics improve together can a low PB potentially move toward a higher valuation center.

This round of changes looks more like a re-layering of the industry rather than a broker bull market distributed evenly across the board. Futu provides a sample of platform scaling, Ant and Yaocai are trying to buy a more advanced starting point, and large groups continue to allocate capital to cross-border businesses. As for who will be revalued, who will be acquired, and who will remain in the discount zone, it all comes back to the same question: how much stable return can each unit of net assets actually generate.

This article does not constitute investment advice.

References

• HKEX: Hong Kong’s Markets: H1 2026 Update, data as of 2026-06-30.
• Joint Announcement in Relation to the Privatisation of Guotai Junan International, 2026-08-07; Guotai Junan International 2025 Annual Report.
• Announcement of the Acquisition of Shares of Bright Smart Securities and Financial, 2025-04-25; Announcement of Completion of the Transaction, 2026-03-30; Announcement of the Closing of the Offer, 2026-04-29.
• Announcement of CITIC Securities’ Private Placement of H Shares, 2026-05-28; Announcement of Completion of the Issuance, 2026-08-06.
• Futu Holdings Announces First Quarter 2026 Unaudited Financial Results, 2026-06-04.
• CSRC: CSRC Seriously Investigated and Handled Cases of Illegal Cross-Border Business Operations by Institutions Such as Tiger Brokers, 2026-05-27.