Since the beginning of 2022, as of the closing on February 17, the banking sector has increased by 6.12%, ranking third in the Shenwan industry. Over the same period, the Shanghai Composite Index fell 4.72%, the Shenzhen composite index fell 9.65% and the gem index fell 14.53%.
In the context of the downward trend of market shocks, the banking sector that bucked the trend attracted attention. However, the soaring market did not make individual bank stocks escape the undervalued value. The net rate of the bank stock market exceeded 70%, and the net rate of the bank stock market was less than twice. At the same time, according to the statistics of the reporter of Securities Daily, a number of listed banks have successively launched stock price stabilization schemes since this year.
In the view of insiders, although there have been fluctuations in the banking sector in recent years, the central sector has shown a slow upward trend, and is still optimistic about the valuation repair market of the banking sector in the future.
several banks started measures to stabilize stock prices
On February 14, Bank Of Chongqing Co.Ltd(601963) issued an announcement on measures to stabilize the stock price. It is proposed to take measures to increase the shares held by the current directors, senior managers and the largest shareholder of the bank to stabilize the stock price, with a total increase of no less than 26.6224 million yuan. Previously, on the first trading day after the Spring Festival, China Zheshang Bank Co.Ltd(601916) , Chongqing Rural Commercial Bank Co.Ltd(601077) also successively issued announcements that had triggered the starting conditions of measures to stabilize the stock price.
The three banks said in the announcement, “from January 4, 2022 to February 7, 2022, the closing price of the bank’s A-share shares has been lower than the bank’s latest audited net assets per share for 20 consecutive trading days, which has triggered the starting conditions for the measures to stabilize the stock price.” In fact, the above three banks are not the first time to start measures to stabilize share prices.
In an interview with Securities Daily, Xue Hongyan, vice president of Suning Financial Research Institute, said that there are two main reasons for the launch of measures to stabilize stock prices by many listed banks since this year. First, at the fundamental level, with the implementation of measures to stabilize growth, bank credit has exceeded expectations and asset quality is expected to be significantly improved, It has increased the confidence of listed banks to protect the market. Second, the “net breaking” dilemma caused by the long-term undervaluation of the banking sector.
According to the data of China stock market news choice, the reporter of Securities Daily found that, as of the closing of February 17, among the 42 listed banks of a shares, the number of “broken net” banks reached 32, accounting for more than 70%. Among them, only Bank Of Ningbo Co.Ltd(002142) price to book ratio broke 2, followed by China Merchants Bank, Bank Of Hangzhou Co.Ltd(600926) , Bank Of Chengdu Co.Ltd(601838) and other stocks. The price to book ratio of China Minsheng Banking Corp.Ltd(600016) is only 0.36 times, that of Hua Xia Bank Co.Limited(600015) is 0.38 times, and that of China Citic Bank Corporation Limited(601998) , Shanghai Pudong Development Bank Co.Ltd(600000) , Chongqing Rural Commercial Bank Co.Ltd(601077) , Bank Of Beijing Co.Ltd(601169) , Bank Of Communications Co.Ltd(601328) failed to exceed 0.5 times.
According to the data of China stock market news choice, as of the closing on February 17, the price to book ratio of the banking sector was only 0.62 times, ranking the penultimate in the Shenwan industry.
For the situation that the fundamentals of bank stocks are good but the share price is depressed for a long time, Xue Hongyan believes that the main reason is that the market is not optimistic about the long-term fundamentals of the bank sector. In addition to a few excellent banks, large banks are affected by the shift of China’s financing structure from indirect financing to direct financing, and the medium and long-term scale space is limited. Small and medium-sized banks are challenged by the dual challenges of regional economic structure adjustment and digital transformation, resulting in greater uncertainty in their business prospects.
many institutions are optimistic about the banking sector
In the context of volatile market trend, undervalued bank stocks performed well. From the perspective of lengthening the time line, since the beginning of 2022, the rise of individual bank stocks has been gratifying. 36 of the 42 listed banks with A-Shares have realized the rise, of which bank of Lanzhou ranks first temporarily with the rise of 77.59%; Bank Of Chengdu Co.Ltd(601838) rose by 19.83%, ranking second; Industrial Bank Co.Ltd(601166) since the beginning of the year, the share price has risen 16.49%, ranking third; The share prices of Bank Of Jiangsu Co.Ltd(600919) , Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Postal Savings Bank Of China Co.Ltd(601658) , Bank Of Hangzhou Co.Ltd(600926) , Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) , Bank Of Nanjing Co.Ltd(601009) and so on have also increased by more than double digits this year.
The “stock market weathervane” northbound funds also increased their positions in the banking sector on a large scale in 2022. The market value of the banking sector held in January increased by 20.799 billion yuan, ranking first among all industry sectors, far exceeding that of other industry sectors.
Xue Hongyan said that since the beginning of the year, the trend of the banking sector has been good, mainly due to the repair of the valuation of the sector under the expectation of stable growth. However, in terms of the performance of individual stocks, the differentiation is still relatively large. There are 10 stocks with an increase of more than 10%, and most bank stocks have limited increase, and some even fell slightly.
The industry is quite concerned about the future performance of bank stocks. For the post-2022 market, many institutions still hold a firm optimistic attitude.
“The fundamentals are supported and the ‘wide credit’ is still on the way. We continue to be optimistic about the banking sector.” Everbright Securities Company Limited(601788) Wang Yifeng, chief analyst of the financial industry, told the reporter of Securities Daily that under the background of great downward pressure on the economy and the continuous promotion of various stable growth policies, the market still has expectations for “wide credit”. Superimposed on the basic mask of banks, there is good support. At this stage, the valuation and the proportion of institutional positions are still relatively low, and it is expected to perform better in the future.
From the perspective of performance, the listed banks that have disclosed the 2021 performance express have a bright overall performance, and the strong performance of performance has also led many securities companies to frequently say “optimistic about bank stocks” in the recently released research report.
Ping An Securities research report pointed out that at present, the valuation level of the banking sector is at an absolute low in history, and the safety margin is sufficient. It is optimistic about the valuation repair opportunities of the sector. Looking forward to the first quarter of 2022, the gradual implementation of the steady growth policy is expected to support the fundamentals of banks.
Galaxy Securities also believes that at the current stage, the banking industry is expected to benefit from steady growth and accelerate the release of the effect of wide credit. The business environment is expected to be further optimized, and the prosperity is expected to rebound. It is basically oriented to the good trend, and continues to be optimistic about the low valuation repair opportunities of sectors and high-quality individual stocks.
However, some experts believe that the future trend of bank stocks is still likely to be divided. A few banks are supported by the logic of wealth management, small and micro finance and digital transformation. The market trend will be better and better, with medium and long-term investment value; For most listed banks, they will still experience repeated adjustment and bottom grinding process for a long time. Only bank stocks with inflection point improvement in fundamentals can get out of the independent market.
