Bank stocks are ushering in “spring”!
on the one hand, the one-day increase of the banking sector reached a new high in nearly half a year. On the other hand, due to the long-term “net breaking” of the stock price, many A-share listed banks triggered the obligation of “maintaining stability” of the stock price again.
On the first trading day of the year of the tiger, China Zheshang Bank Co.Ltd(601916) , Chongqing Rural Commercial Bank Co.Ltd(601077) , Bank Of Chongqing Co.Ltd(601963) successively announced that the starting conditions of measures to stabilize the stock price were triggered because the stock price was lower than the net assets per share for 20 consecutive trading days.
According to the stable share price plan disclosed by Chongqing Rural Commercial Bank Co.Ltd(601077) , the nine directors and executives of the bank will increase their holdings with their own funds that do not exceed 15% of their after tax remuneration from the bank in the previous year. China Zheshang Bank Co.Ltd(601916) , Bank Of Chongqing Co.Ltd(601963) will formulate specific plans to stabilize the stock price before February 21.
3 banks trigger the obligation of “maintaining stability” of stock price
On February 7, China Zheshang Bank Co.Ltd(601916) , Chongqing Rural Commercial Bank Co.Ltd(601077) , Bank Of Chongqing Co.Ltd(601963) successively announced that from January 4 to February 7, the bank’s A-share price had been lower than the latest audited net assets per share for 20 consecutive trading days, reaching the starting conditions for triggering measures to stabilize the stock price.
Among them, China Zheshang Bank Co.Ltd(601916) , Bank Of Chongqing Co.Ltd(601963) will convene the board of directors before February 21 to formulate and announce specific measures to stabilize the stock price. Chongqing Rural Commercial Bank Co.Ltd(601077) directly disclosed the plan to stabilize the stock price on the trigger day – since the repurchase of shares is not feasible, the bank will fulfill its obligation to stabilize the stock price by increasing the holdings of directors and senior executives.
According to the announcement, Chongqing Rural Commercial Bank Co.Ltd(601077) there are 9 directors and senior executives (including 5 directors and 4 vice presidents) who need to perform the obligation of stabilizing the stock price this time. The above-mentioned nine directors and senior executives will increase their A-share shares of the bank with their own funds that do not exceed 15% of their after tax salary from the bank in the previous year. There is no price range in this increase plan.
The announcement also showed that during the year, the bank’s directors and executives had only one obligation to stabilize the stock price. In addition, the implementation period of this shareholding increase is within six months from February 8, but subject to the sales restriction period of the bank’s annual report and quarterly report, this shareholding increase plan will actually start to be implemented after the release of the first quarterly report in Chongqing Rural Commercial Bank Co.Ltd(601077) 2022.
It is understood that China Zheshang Bank Co.Ltd(601916) , Chongqing Rural Commercial Bank Co.Ltd(601077) both landed in the A-share market in the fourth quarter of 2019, Bank Of Chongqing Co.Ltd(601963) became the first “a + H” City Commercial Bank in the West in early 2021. Since the listing, Chongqing Rural Commercial Bank Co.Ltd(601077) has triggered the obligation of “maintaining stability” of stock price four times, China Zheshang Bank Co.Ltd(601916) , Bank Of Chongqing Co.Ltd(601963) also have three times and two times respectively.
In addition to fulfilling the obligation of stabilizing the stock price by increasing the holdings of directors, supervisors and senior executives due to triggering the starting conditions of measures to stabilize the stock price, since the listing, the above-mentioned three banks have also injected a booster into the stock price by increasing the holdings of major shareholders, senior executives and middle-level collective.
awakened “colored egg”
The “stability maintenance” of directors and executives stems from a “colored egg” buried by regulators in 2013.
Back in November 2013, the CSRC issued the opinions on further promoting the reform of new share issuance system, which stipulates that the issuer and its controlling shareholders, directors and senior executives of the company shall put forward a plan to stabilize the company’s share price when the company’s share price is lower than the net assets per share within three years after listing.
According to the opinions, the plan shall include the specific conditions for starting the stock price stabilization measures and the specific measures that may be taken. The specific measures may include the issuer’s repurchase of the company’s shares, and the controlling shareholders, directors and executives of the company increase their holdings of the company’s shares. When starting the stock price stabilization measures, the above shareholders or personnel shall announce the specific implementation plan in advance.
Since the issuance of the above provisions, each listed company has added some necessary contents in the prospectus: the plan for stabilizing the A-share price within three years after listing. However, after the implementation of this provision, the vast majority of companies have not experienced continuous “net breaking” within three years after listing, so it has become a “sleeping clause” and has not been actually implemented.
Since 2016, the A-share listing of small and medium-sized banks has been reopened, and this “sleeping clause” has also “awakened” in May 2018 – Bank Of Shanghai Co.Ltd(601229) , Bank Of Jiangsu Co.Ltd(600919) has become a “water tester” and “protected” by major shareholders.
According to statistics, since 2016, a total of 26 banks have landed in the A-share market, of which only Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Qingdao Co.Ltd(002948) , Xiamen Bank Co.Ltd(601187) , and four sub IPO banks that have been listed for less than a year have not triggered the obligation of “maintaining the stability” of stock prices.
However, there is no precedent for domestic banks to repurchase shares, and the shares repurchased can only be cancelled and the registered capital can not be turned into “treasury shares”, so the repurchase is not operable. Banks that trigger the conditions for maintaining the stability of stock prices can only fulfill their obligations in accordance with the provisions of the prospectus for listing, or increase the holdings of shareholders, directors and senior executives, or both.
the one-day increase of the banking sector hit a new high in nearly half a year
after the “rest” of the Spring Festival holiday, the A-share banking sector ushered in a “good start” on the first trading day of the year of the tiger, with a single day rise of 2.65%, a new high in nearly half a year.
Among them, Industrial Bank Co.Ltd(601166) led the rise with an increase of 5.41%, Bank Of Ningbo Co.Ltd(002142) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , China Merchants Bank Co.Ltd(600036) , Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) , Bank Of Chengdu Co.Ltd(601838) , Bank Of Hangzhou Co.Ltd(600926) also rose by more than 4% on the same day, and the rest of the stocks were red across the board.
In the whole January, although banking stocks rose and fell, the monthly increase of the sector was also close to 2.5%, outperforming the market performance by 10.1 percentage points, ranking first in 30 sectors according to the first-class industry of CITIC.
according to the latest research report of galaxy securities, the leading performance of the banking sector is mainly due to the impact of the higher than expected performance of the 2021 annual report and the increase of market risk aversion. The subsequent spring market is expected to continue. The investment opportunities in the first quarter come from the following five aspects:
First, the bank’s fundamentals are expected to remain stable and the risk is controllable, taking into account multiple factors such as the widening of the policy environment, the gradual liquidation of non-performing risks and the full provision;
Second, the reduction of reserve requirements and interest rates has been implemented one after another. The quota of special bonds in the first quarter was issued in advance and the issuance of government bonds was accelerated, which is conducive to stimulating infrastructure investment and the demand for medium and long-term loans of enterprises, accelerating the formation of a wide credit pattern, and conducive to the recovery of the banking industry;
Third, it is expected that the policies related to short-term steady growth will still be overweight to deal with the impact of overseas interest rate hikes on the current policy effect and macro-economy;
Fourth, the marginal improvement of real estate policy will help promote the orderly resolution of credit risks of real estate enterprises and alleviate the pressure on the quality of bank assets;
Fifth, the current valuation of the banking sector has a good margin of safety, and the allocation value of the sector is increasing
