A-share non-bank financial stocks, including brokers and insurers, have underperformed the market this year even as their first-half earnings outlook improves sharply, according to Jiemian News. The article said the sector has been overlooked amid a July style rotation away from growth and toward value, while valuations remain low.

Jiemian News reported that several listed brokers issued strong half-year profit forecasts. Guotai Haitong expects adjusted net profit attributable to shareholders of about 19.249 billion yuan to 19.757 billion yuan, up 164% to 171% year on year; CICC expects net profit of 7.708 billion yuan to 8.227 billion yuan, up 78% to 90%; CITIC Securities expects net profit of about 23.343 billion yuan, up 70%; Zhongtai Securities expects 1.752 billion yuan, up 146%; and China Merchants Securities expects first-half net profit of 10 billion yuan to 11 billion yuan, up 93% to 112%. The article said the gains were driven by active trading, investment income and better business mix.

Insurers also reported sharp profit growth. China Life expects first-half adjusted net profit attributable to shareholders of about 128.9 billion yuan to 137.1 billion yuan, up 215% to 235%, while Xinhua Insurance expects net profit of 20.719 billion yuan to 23.678 billion yuan, up 40% to 60%. Jiemian News said the sector is benefiting from a recovery in investment income, while liability-side demand remains resilient.

The article also said non-bank financial stocks still trade at relatively low valuations versus their recent profit growth, and noted that active fund holdings of the sector have fallen to about 0.9%. It added that investors are watching turnover, the final H1 earnings releases, long-term interest rates and whether sector ETFs and active funds begin to add exposure.