Monetary policy continued to exert force, the economy grew steadily, and the market liquidity was relatively loose. On December 15, 2021, the reserve ratio of large, medium and small deposit institutions was reduced by 50bp; On January 20, the one-year LPR was lowered by 10bp to 3.70% and the five-year LPR by 5bp to 4.60%. The reduction of reserve requirement and interest rate will release sufficient incremental funds and benefit the large financial sector.
Securities companies: beautiful performance and low valuation. A number of listed securities companies predicted high performance growth in 2021, including Dongcai 8.2 to 8.9 billion yuan, a year-on-year increase of + 71.62% to 86.27%, CITIC 22.979 billion yuan, a year-on-year increase of + 54.20%, and Guotai Junan Securities Co.Ltd(601211) 15.013 billion yuan, a year-on-year increase of + 34.98%. Since the beginning of the year, the average daily turnover of A-Shares is 1.04 trillion yuan and the average daily balance of two financing is 1.79 trillion yuan, which are basically equivalent to the level of 2021. Under the background of relatively loose market liquidity, we judge that the activity of the capital market can be maintained, and the main business lines of securities companies are expected to continue to benefit. Two types of securities companies are mainly recommended: 1) characteristic securities companies of wealth management: the holding scale of public funds of q421 fund consignment institutions continues to reach a new high, of which the holding scale of stocks + mixed funds is + 5.1% to 6.46 trillion yuan month on month, and the holding scale of non monetary funds is + 8.8% to 8.33 trillion yuan month on month. The general trend of wealth management development remains unchanged; 2) Large leading securities companies: OTC derivatives, institutional business and large investment banking business will become important performance growth points of the industry. Most of these businesses show the attribute of “the strong is always strong”, and the head securities companies can occupy more performance increment.
Bank: asset quality continued to improve and performance grew steadily. Since the beginning of the year, the banking sector has risen 6.56%, leading – 5.46% of all a shares. A number of listed banks forecast high performance growth in 2021, including Bank Of Ningbo Co.Ltd(002142) 19.515 billion yuan, a year-on-year increase of + 29.67%, Ping An Bank Co.Ltd(000001) 36.336 billion yuan, a year-on-year increase of + 25.60%, China Merchants Bank Co.Ltd(600036) 119.922 billion yuan, a year-on-year increase of + 23.20%. The asset quality of the banking industry has remained good after years of performance accumulation and large write offs of provisions. At the same time, the risk of the real estate industry has been mitigated, and the market concerns are gradually fading. We believe that banks with high fundamentals have strong interest margin toughness, excellent asset quality, good development of wealth management and other businesses, and their performance is expected to be better than that of their peers.
Insurance: sector valuation or repair. Under the expectations of downward interest rate, cold start and negative growth of NBV, the valuation of listed insurance companies is too low due to excessive concerns in the market. We believe that the overall improvement of the valuation of the large financial sector is expected to promote the valuation repair of the insurance sector. In addition, although the industry is still in the bottom stage of manpower decline, the improvement of retained manpower quality can be expected under the promotion of channel reform, and the debt end of the industry may be repaired in the future.
Investment suggestion: the current Pb (MRQ) of the [securities firm] sector is 1.53x, which is at a low level in the past five years. Under the active capital market, the momentum of securities firms is still high. China stock market news, Huatai Securities Co.Ltd(601688) , Citic Securities Company Limited(600030) , Gf Securities Co.Ltd(000776) are recommended; The current Pb (MRQ) of [bank] sector is 0.74x, which is at the level of absolute undervaluation. The configuration cost performance is high, and with the increase of random structure attention, the valuation of the sector may be subject to continuous repair. Recommended Ping An Bank Co.Ltd(000001) , Chongqing Rural Commercial Bank Co.Ltd(601077) , Agricultural Bank Of China Limited(601288) ; [insurance] the current valuation is at an all-time low and the margin of safety is high. Recommend Ping An Insurance (Group) Company Of China Ltd(601318) , China Pacific Insurance (Group) Co.Ltd(601601) , China Taiping.
Risk tips: the capital market scene is less generous than expected, the macroeconomic downturn is more than expected, and the impact of the epidemic is more than expected.
