Summary of this issue:
Core view: the central economic work conference gave the direction of the current economic situation and future monetary and fiscal policies, and mentioned finance in two aspects. First, financial institutions provide financing support to small and micro enterprises, and second, fully implement the registration system. We can see that since the implementation of the “new securities law”, the gem registration system, the establishment of the science and innovation board and the establishment of the Beijing stock exchange have played an important role in increasing the proportion of direct financing in China. At the same time, under the complex international and Chinese macro environment, the liquidity is moderately loose, and the brokerage sector may have excess returns in the future as the subject of direct returns. The performance support brought by investment banking and wealth management and the consolidation of asset quality after full provision for impairment have laid the foundation for the rise of the sector. Securities companies will not be absent in the spring market, and investors are recommended to focus on configuration. In the insurance sector, due to the start-up of some insurance enterprises and the superposition of factors such as supply and demand mismatch, the liability side of insurance enterprises is still under pressure and the elasticity is still on the investment side. Core targets: Gf Securities Co.Ltd(000776) , Zheshang Securities Co.Ltd(601878) , East Money Information Co.Ltd(300059) , China Pacific Insurance (Group) Co.Ltd(601601) , Ping An Insurance (Group) Company Of China Ltd(601318) , etc.
Market review: the main indexes rose and fell this week, and the Shanghai composite index reported 3666.35 points, + 1.63%; Shenzhen stock index reported 15111.56 points, + 1.47%; The CSI 300 index reported 5055.12, + 3.14%; Gem 3466.80, -0.34%; The China Securities composite bond (net price) index reported 99.57, + 9bp. The average daily turnover of A-Shares in Shanghai and Shenzhen stock markets was 1.00854 trillion yuan, up + 2.91% month on month, and the balance of two financial institutions was 1842.329 billion yuan, down – 0.10% from last week. In terms of individual stocks, brokers: Chinalin Securities Co.Ltd(002945) + 29.77%, China Industrial Securities Co.Ltd(601377) + 10.00%, Caida Securities Co.Ltd(600906) + 7.69%; insurance: Ping An Insurance (Group) Company Of China Ltd(601318) + 4.55%, China Pacific Insurance (Group) Co.Ltd(601601) + 3.84%, China Life Insurance Company Limited(601628) + 3.79%; diversified Finance: Shanghai Guijiu Co.Ltd(600696) + 16.02%, Gi Technologies Group Co.Ltd(300309) + 12.97%, Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) +7.43%。
Views of the securities industry: on December 10, the Shanghai and Shenzhen stock exchanges publicly solicited opinions on the stock listing rules of the Shanghai Stock Exchange and the stock listing rules of the Shenzhen Stock Exchange. In accordance with the basic requirements, listing and trading, corporate governance, information disclosure, delisting and regulatory responsibilities, the Listing Rules of Shanghai and Shenzhen have adjusted and simplified the original 18 chapters into 16 chapters according to the theme logic, and implemented Guofa No. 14 document to promote listed companies to improve their governance level, strengthen the “gatekeeper” obligation of intermediary structure, and optimize the information disclosure rules, Make institutional preparations for the comprehensive registration system. The two listing rules have newly established a special chapter on “intermediary institutions”, which integrates the relevant provisions of the sponsors of the original rules and accounting firms in periodic reports, and incorporates the professional ability requirements of intermediary institutions such as financial consultants, law firms, asset evaluation and credit rating; A new special chapter on “corporate governance” is set up to comprehensively regulate the “key minority” behaviors such as controlling shareholders and actual controllers, urge them to exercise their rights according to law, require them to do their best to safeguard the independence of listed companies, strictly fulfill their commitments and other shareholder obligations, prevent and control high proportion pledge, and prohibit illegal guarantee, fund occupation and other behaviors that encroach on the interests of the company. Optimize the information disclosure rules, encourage listed companies to disclose voluntary information related to investors’ value judgment and investment decisions, refine the norms of voluntary information disclosure, and make it clear that voluntary information disclosure should maintain continuity and consistency. In 2022, the registration system will be implemented in the whole market to benefit investment banks. The central economic work conference 2021-2022 mentioned that the full implementation of the stock issuance registration system is a mature arrangement after the overall smooth operation of the pilot registration systems on the science and innovation board and the gem. The successful implementation of the pilot registration system of scientific innovation edition in 2019 and the smooth operation of the pilot registration system of gem in 2020 have accumulated valuable experience for the comprehensive registration system. In April 2021, the main board of Shenzhen Stock Exchange was officially merged with the small and medium-sized board, creating necessary conditions for the comprehensive registration system. The whole market registration system in 2022 has become a foregone conclusion. The listing conditions of the registration system will be more diversified and inclusive, the number of enterprises meeting the listing standards will increase significantly, the division of labor between the CSRC and the exchange will be clear, the issuance time will be shorter, the issuance efficiency will be higher, and more high-quality companies will accelerate their landing in the A-share market. In addition, the registration system tests the asset pricing ability and sales ability of securities companies. Enterprises are willing to pay a premium for more professional investment banks. The IPO rate is expected to increase, and the investment banking business in the securities industry is expected to usher in a simultaneous rise in volume and price. We believe that the head securities companies with strong asset pricing ability, sales ability and other comprehensive investment banking capabilities will fully benefit from the implementation of the whole market registration system. It is suggested to pay attention to: China International Capital Corporation Limited(601995) , China Securities Co.Ltd(601066) , Citic Securities Company Limited(600030) .
With the rapid growth of residents’ wealth and strong demand for wealth management, the wealth management of securities companies will deliver results. From 2019 to 2020, China’s per capita GDP exceeded US $10000 for two consecutive years. In 2021, China’s per capita GDP is expected to reach 110 trillion yuan this year, with a per capita GDP of about US $12000, close to the high-income standard of the world bank. The proportion of financial assets in China’s household asset allocation is 20.4%, which has increased significantly compared with the past, but there is still a large gap with 71% in the United States, and the development prospect of the wealth management market is huge. From 2021 to 2022, the central economic work conference once again emphasizes “no speculation in housing and housing”, superimposes “deposit moving” and just redeemed products withdraw from the historical stage. The extruded residents’ wealth will flow to the field of wealth management, and the wealth management of securities companies will usher in incremental performance. Wealth management revenue increases with the increase of customer assets and financial products. It has strong stability. The yield of wealth management business is much higher than that of traditional brokerage business. The profitability of companies with outstanding product and service capabilities will continue to improve with the increase of the contribution of wealth management revenue. Securities companies with real high-quality products, high-quality investment consultants and strong customer retention ability are more competitive, and their income increases with the increase of customer assets and financial products. In the first three quarters, roe, the leading broker in wealth management business of securities companies, increased significantly, and the improvement effect of wealth management on the company’s profitability has been reflected in the net profit growth of each company. Brokers with fast growth and large volume of wealth management AUM will enjoy valuation premium. It is suggested to focus on the core targets benefiting from the expansion of the wealth management market: 1 Obvious advantages in products and investment advisers China International Capital Corporation Limited(601995) to promote the large-scale development of high-end wealth management; 2. Benefiting from residents’ wealth entering the market through institutions, double excellence in products and investment advisory services + high proportion of asset management income + Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , China Industrial Securities Co.Ltd(601377) with high contribution of participating / holding public funds; 3. The company attaches great importance to its strategy and has obvious characteristics of private placement and consignment sales, which is expected to realize Zheshang Securities Co.Ltd(601878) overtaking in curves. The current valuation of securities companies is PB1 82 times, the valuation still does not match the performance and asset quality, which is 2.5 times away from PB2 There is still much room for 61x valuation center.
Insurance industry view: December 10, China Banking and Insurance Regulatory Commission on the regulations on the administration of insurance asset management companies (Draft for comments) Public consultation. The management aims to achieve long-term value preservation and appreciation, based on long-term investment and steady investment, and lead to the injection of long-term funds for the high-quality development of the real economy. The draft stipulates that on the basis of the 1 + 3 business norms of insurance asset management products last year, various management norms of insurance companies have been upgraded, forming a comprehensive supervision system of insurance asset management from business to institutional management. In addition, in combination with the new regulations on asset management and the regulatory practice in recent years, the draft adds contents such as corporate governance and risk management, makes up for the gap of the current regulations on the governance, business principles and risk management of insurance asset management companies, and standardizes the operation of insurance asset management companies. The administrative provisions implement the regulations issued by the financial department of the State Council to allow foreign investors to hold more than 25% of shares, no longer limit the upper limit of the proportion of shares held by foreign insurance companies in insurance asset management companies, at the same time, set the uniformly applicable shareholder qualification conditions for domestic and foreign shareholders, and no longer limit the upper limit of the proportion of shares held by foreign insurance companies in insurance asset management companies, It will help expand opening to the outside world.
The central bank’s overall RRR reduction and the signal released by the central economic work conference are more positive than that in 2021. The RRR reduction will increase liquidity and promote some liquidity into the insurance industry. The attraction of financial products is expected to increase in the short term, which is conducive to the sales of financial products such as annuity. On the investment side, the impact is limited in the short term, mainly because the central economic work conference sets the currency more accurately, there is no flood, and China’s economy is still relatively strong compared with overseas, and the interest rate is expected to remain stable. In the long term, with the decline of market interest rates, insurance companies or adjust the asset liability structure, By lengthening the asset duration adjustment and the matching of the liability side, we can better deal with the low interest rate.
Looking forward to the fourth quarter, the liability side: we expect that the pressure on the liability side will still exist this year due to the comprehensive impact of factors such as the lower than expected effective manpower growth of insurance enterprises in the post epidemic era and the mismatch between customer demand and agent quality. Next year, considering the lagging start, the increase in production capacity is difficult to offset the decline in the number of agents, and the impact of the high base brought by the suspension of speculation in the same period last year, the performance in the first quarter of next year may continue to be under pressure. At present, the products that have made a good start are mainly short-term insurance + increased lifetime insurance and annuity insurance with universal account. The payment period of some annuity products is shorter than last year, and nbvmarkin may be reduced. On the asset side, the adverse impact of real estate investment on insurance companies has been fully reflected. Affected by the economic downturn, the central bank announced this week that it would reduce the reserve requirement by 0.5 percentage points on the 15th. At the same time, the central economic work conference made it clear that the weight of steady growth in economic operation would be increased, and there was still downward pressure on medium and long-term interest rates. We judge that the epidemic situation and the emergence of policy benefit insurance have accelerated residents’ awareness of insurance, led to the mismatch between supply and demand, and exposed the disadvantages of traditional agent sales channels. With the decline of agent dividends, third-party sales channels are expected to rise, especially the brokerage channels benefiting from the development of the Internet and the high-quality offline sales personnel, as well as the significant improvement of nbvm and the bancassurance channels benefiting from the “deposit moving” and the establishment of pension accounts. The current share prices of Guoshou, Ping An, Taibao and Xinhua 2021epev are 0.71x, 0.64x, 0.54x and 0.46x respectively, with a high margin of safety.
Liquidity view: in terms of volume, the central bank’s net return on the open market this week was 180 billion yuan, including 50 billion yuan for reverse repurchase and 230 billion yuan for return. Next week, 50 billion yuan of reverse repurchase and 950 billion yuan of MLF will expire. In terms of price, the short-end capital interest rate rose for 7 days a day this week. The weighted average inter-bank offered rate decreased by 10bp to 1.89%, and the inter-bank pledged repo rate decreased by 7bp to 1.90%. R001 goes down 10bp to 1.85%, R007 goes up 12bp to 2.28%, and dr007 goes up 9bp to 2.14%. Shibor’s overnight interest rate fell 11bp to 1.81%. Interbank certificates of deposit issue interest rates vary. The yield of one-year treasury bonds rose 5bp to 2.30%, the yield of 10-year Treasury bonds fell 3bp to 2.84%, and the term spread narrowed 8bp to 0.54%. This week, the central bank announced that it would cut the reserve requirement by 0.5 percentage points on the 15th. At the same time, the central economic work conference mentioned that the importance of steady growth has increased. Superimposed on the recent epidemic situation, there is still downward pressure on medium and long-term interest rates in the future.
Diversified financial perspective: focus on the trust and financial holding sectors that benefit from stimulating economic policies.
Risk factors: the deterioration of the covid-19 epidemic, the decline of China’s economy beyond expectations, the decline of long-term interest rates beyond expectations, the success of the start is less than expected, the tightening of financial regulatory policies, the risk of spread loss caused by low interest rates, the pressure of agents to fall off, lower than expected insurance sales, the uncertainty of the impact of capital market fluctuations on performance, etc.
