Event overview
On December 8-10, 2021, the central economic work conference was held in Beijing to make comprehensive arrangements for the economic work in 2022. The meeting proposed that we should pay close attention to the pilot of comprehensive reform of market-oriented allocation of factors and fully implement the stock issuance registration system; Adhere to the principle of housing without speculation, and support the commercial housing market to better meet the reasonable housing needs of buyers.
Event comments
1. Fully implement the stock registration system, benefiting the leading securities investment banks
Continuous progress of reform: from June 2019 to November 2021, the science and innovation board, the gem and the Beijing stock exchange have been established or reformed successively, and the registration system has been piloted at the same time. In March 2021, the outline of the 14th five year plan proposed to fully implement the registration system, establish a normalized delisting mechanism and improve the quality of listed companies. In April 2021, the main board of Shenzhen Stock Exchange merged with the small and medium-sized board, laying the foundation for the comprehensive registration system. On December 10, 2021, the central economic work conference proposed to fully implement the registration system, and the long-awaited comprehensive registration system is expected to be implemented next year. It can be seen from a series of policies that the capital market reform has been continuously promoted since 2018, and the prosperity of the securities industry is high.
Investment banking leaders benefit: the comprehensive registration system is conducive to improving the issuance efficiency, increasing the proportion of direct financing, and bringing performance increment to the investment banking business of securities companies. The registration system reform puts forward higher requirements for the underwriting ability, pricing ability and sales ability of securities companies. The head securities companies with rich project experience and sufficient talent reserves benefit more. The income concentration of investment banking business has increased from 29% in 2019 to 31% in 21h1. At the end of 21q3, the IPO underwriting scale Cr5 exceeds 50%. It is judged that the leading investment banks will continue to benefit from the dividends of the registration system reform in the future.
2. Reconfirmation of real estate risk improvement and controllable investment risk of insurance enterprises
In terms of the development of the real estate industry, the central government expressed its support for the commercial housing market to better meet the reasonable housing needs of buyers, and implemented policies to promote the virtuous circle and healthy development of the real estate industry. In terms of prevention and resolution of major risks, it emphasizes the responsibility of local, financial supervision, industry directors and other parties, compacts the main responsibility of enterprise self-help, and formulates policies and disposal mechanisms to resolve risks through extensive cooperation.
We believe that the healthy development trend of the real estate industry remains unchanged. The central government pays enough attention to the risks that have occurred or may occur in the future, and emphasizes the implementation of the responsibilities and overall cooperation of relevant responsible parties, which will promote the effective disposal of crisis enterprise risks, and the risk diffusion probability in a large area of the real estate industry is small. Based on the policy requirements for the steady development of the real estate industry and risk resolution, the real estate risk improvement of insurance enterprises is reconfirmed.
Investment advice
The securities industry maintained a high outlook. Investment banking leaders benefited from the comprehensive registration system reform, maintained the “optimistic” rating of the industry, and recommended Citic Securities Company Limited(600030) , the leading investment banking business China International Capital Corporation Limited(601995) (H), Huatai Securities Co.Ltd(601688) . The current valuation of the insurance industry has fallen to a historical ultra-low. With the improvement of real estate risk confirmed again, the insurance industry continues to maintain a “good” rating. It is recommended to pay attention to Ping An Insurance (Group) Company Of China Ltd(601318) and China Pacific Insurance (Group) Co.Ltd(601601) .
Risk statement
The macro economy has dropped sharply; The progress of market reform is less than expected; Risks in the real estate industry have expanded.
