During the first half of 2026, A-share market turnover hit a record high while the bond market followed a volatile yet strengthening slow bull trend. Based on industry parent company data, the securities sector's revenue and net profit grew 32% and 23% year-on-year respectively, with listed brokers performing even better. In H1 2026, 44 A-share pure securities firms generated combined operating revenue of RMB 375.215 billion, up 44.39% year-on-year, with combined net profit attributable to shareholders reaching RMB 163.434 billion, up 48.86%.

Among these 44 brokers, CITIC Securities led in both revenue and net profit, while Pacific Securities ranked lowest on both metrics. China Merchants Securities recorded the highest revenue growth at 108.19%, Hongta Securities posted the steepest revenue decline at 14%, Tianfeng Securities reported the fastest net profit growth at 549.03%, and Hongta Securities again had the largest net profit drop at 23.93%. Only Great Wall Securities and Hongta Securities saw negative revenue growth, while only Hongta Securities and Chinalin Securities reported declines in net profit.

Chinalin Securities Co.,Ltd. is worth particular attention. Excluding Guosheng Securities—which argues its investment in Qudian is not part of proprietary trading—Chinalin Securities had the lowest proprietary trading revenue and the largest decline. Notably, Chinalin Securities' ratio of fixed-income securities to equity securities in its proprietary book is the lowest at approximately 3.2:1, yet its proprietary revenue still plummeted 70%.

Amid an industry-wide rally, Chinalin Securities delivered a puzzling performance: H1 revenue of RMB 849 million, up just 1.67% year-on-year, with net profit attributable to shareholders of RMB 258 million, down 23.32%. According to the semi-annual report's disclosure, the company's proprietary trading revenue was RMB 92 million, down 58.24% year-on-year. Using the formula "proprietary trading revenue = net investment income + net changes in fair value - investment income from associates and joint ventures," the figure stands at RMB 66 million, a 70.55% year-on-year decline—ranking second from bottom among the 44 listed brokers, only slightly above Guosheng Securities.

However, the company's fixed-income to equity ratio of 3.19 is the lowest in the industry, meaning it allocates the highest proportion of its proprietary portfolio to equities. During a half-year marked by record equity trading volumes, proprietary revenue should logically have risen. In H1 2026, the A-share market exhibited structural divergence: the STAR 50 index surged 64.25%, the ChiNext index gained 35.58%, the Shenzhen Component Index rose 19.82%, the Shanghai Composite inched up 3.16%, while the BSE 50 index fell 13.14%. Concurrently, the bond market saw declining interest rate benchmarks and a steepening yield curve, delivering a volatile-but-strong slow bull under ample liquidity and slightly reduced supply.

Chinalin Securities acknowledged that fixed-income investments showed strong growth amid the bond market's choppy conditions. On the equity front, the firm adhered to a low-valuation, low-volatility, high-dividend investment strategy. Yet due to pronounced market style divergence, this core strategy failed to deliver its advantages, causing interim underperformance in equity investing. In short, the company's strategy of favoring value and high-dividend stocks clashed with a market leaning toward tech and growth, a key reason for the pressure on equity income. The firm added that it is proactively adjusting its investment allocation to enhance earnings stability. Nevertheless, since the start of H2 2026, many of the tech stocks that soared earlier have undergone sharp corrections, with the STAR 50 index retreating nearly 30% from its peak. If Chinalin Securities' adjustments involve chasing highs, equity investment could face considerable pressure in the latter half.

Why the severe underperformance? In H1 2026, Chinalin Securities' revenue growth of 1.67% and net profit decline of 23.32% lagged far behind the industry's 32% revenue growth and 23% net profit growth. By business segment, wealth management serves as the company's core pillar, generating RMB 675 million in H1 revenue, up 34.14% year-on-year, with its share of total revenue jumping from 60.28% to 79.53%. However, this growth is highly dependent on market conditions, exhibiting a pronounced "weather-dependent" profile.

The business structure at Chinalin Securities displays significant imbalance: wealth management dominates at nearly 80% of revenue, proprietary trading has contracted sharply, and investment banking and asset management are almost negligible. In H1 2026, investment banking revenue was RMB 28.85 million, up 253.32% year-on-year but accounting for only 3.4% of total revenue; asset management revenue was a mere RMB 5.1865 million, down 23.66% year-on-year, representing just 0.61% of total revenue.

The data clearly shows that the sharp decline in proprietary trading income was a major factor behind the company's revenue underperformance. Moreover, proprietary trading posted negative profits, with its operating margin plunging from 63.65% in the prior-year period to -12.4%, translating into an operating loss of approximately RMB 11.4 million—a critical contributor to the substantial drop in net profit.

Compliance gaps surfaced repeatedly in H1 2026, with Chinalin Securities receiving three regulatory penalties spanning brokerage, investment banking, and internal controls. In January, the Liaoning CSRC bureau issued a warning letter to the firm's Liaoning branch for failing to properly segregate incompatible duties during customer complaint handling. In March, the Shenzhen CSRC bureau ordered the company to take corrective measures. As the continuous supervision sponsor for Yili Clean Energy's 2016 private placement, Chinalin Securities conducted insufficient verification procedures and failed to exercise due diligence—it did not detect issues such as raised funds being misappropriated or related-party guarantees going undisclosed. The company's quality control and internal review departments were also found to have lax oversight, with imprudent conclusions revealing weaknesses in investment banking internal controls.

In April, the Tibet CSRC bureau issued Administrative Supervision Measure Decision No. 3 (2026), citing the following problems: first, historical brokerage operations involved revenue-sharing arrangements with third parties, marketing incentives directly tied to account openings, and vulnerabilities in the management of QR codes for account-opening channels; second, inadequate oversight of brokers, including irregularities in broker contract management; and third, deficient control over branch marketing activities, with compliance requirements not fully integrated into all aspects of branch marketing operations. The regulator imposed a warning letter measure on the company.