Industry core view:
On December 9, 2021, the central bank released financial data for November.
Key investment points:
In November, the growth rate of social finance stock rebounded by 0.1 percentage point month on month: in November, social finance increased by 2.61 trillion yuan, an increase of 478.6 billion yuan year-on-year, slightly lower than the market expectation. At the end of November, the stock of social finance was 311.9 trillion yuan, with a year-on-year growth rate of 10.1% and a month on month rise of 0.1 percentage points. The year-on-year increase in corporate bonds and government bonds was the main contributing factor. In November, the high base effect of government bonds subsided, and government bonds increased year-on-year, making a positive contribution to the growth of social finance. In terms of trust loans, the scale contraction continued in November. The stock of off balance sheet undiscounted bills has fallen to a low level since 2016. Looking forward to 2022, the pressure drop of off balance sheet credit non-standard assets may be significantly downward.
New resident credit continues to pick up: after the policy adjustment, the effect of resident end financing has appeared. On the basis of a slight recovery in October, housing loans maintained a recovery trend in November. In the economic downturn cycle, the overall growth of medium and long-term loans is weak against the background of reduced bank risk appetite. In the future, the high base effect will subside, superimposed with policy adjustments, and medium and long-term loans may stabilize. In terms of short-term loans, new loans are still relatively weak.
The growth rate of M1 decreased by 0.2 percentage points month on month: in November, M2 increased by 8.5% year on year, and the growth rate decreased by 0.2 percentage points month on month, mainly affected by the high base effect; M1 increased by 3% year-on-year, and the growth rate increased by 0.2 percentage points month on month. Due to some recent policy changes, the data in November lagged slightly.
Investment strategy: since December, the policy of steady growth has been launched continuously. The central bank announced on December 6 that it would reduce the deposit reserve ratio of financial institutions by 0.5 percentage points on December 15. On December 7, the central bank lowered the interest rate of small re loans for agricultural support. We expect that the growth rate of social finance in 2022 will start to recover slowly and moderately around the first quarter of 2022. In the same period, the banking sector may be revised by the expectation of asset quality, ushering in the opportunity of valuation improvement. In terms of individual stock selection in 2022, we suggest paying attention to two main lines: first, due to the impact of the macroeconomic downward cycle, we suggest paying attention to companies with relatively weak cycle and stable growth. The second is to focus on companies whose fundamentals continue to improve and whose valuations are expected to improve.
Risk factors: the rapid clearing of debt risks has led to a sharp rise in credit spreads. If the epidemic repeatedly causes the overall economy to continue to weaken, the enterprise revenue will deteriorate significantly, and the performance of the banking sector will fluctuate.
