For the reasons for the sharp rise in the stock market in recent days, there is an online joke: hot money bosses in Shanghai, Hangzhou and Ningbo stay at home and can only speculate in stocks.
On December 9, the Shanghai Composite Index rose by 0.98% and the Shenzhen Component Index rose by 1.23%, with a single day inflow of 21.6 billion yuan from the north, closely catching up with the previous one-day record of 21.7 billion yuan. Under the background of all kinds of “Mao” assets “rising” and playing the leading role, the banking sector that has been on the bench for a long time has also performed well recently.
On Thursday morning, the banking sector rose, and the secondary new shares Zhejiang Shaoxing Ruifeng Rural Commercial Bank Co.Ltd(601528) once hit the daily limit. As of the close of the day, the bank index rose 1.05% with a turnover of 23.8 billion. Zhejiang Shaoxing Ruifeng Rural Commercial Bank Co.Ltd(601528) led with an increase of 6.23%, and Qilu Bank Co.Ltd(601665) , Bank Of Ningbo Co.Ltd(002142) , China Merchants Bank Co.Ltd(600036) increased by more than 2%.
bank stocks rose at the end of the year?
On December 6, the boots of RRR reduction fell to the ground, and the banking sector continued to strengthen. In fact, since December, the banking sector has risen for seven consecutive trading days. The cumulative increase this month was 4.45%. Has the bank stock ushered in a new year’s market?
insiders said that A-Shares have an obvious calendar effect. At the end of the year, public funds faced performance evaluation, gave up aggressiveness, bought undervalued varieties, and improved the safety margin of the overall portfolio.
Another view is that recently, the North increased the intensity of capital purchase. On December 9, the net purchase was RMB 21.6 billion, only slightly lower than the historical record of RMB 21.7 billion. It does not rule out that there will be greater opportunities for a shares. At the beginning of the market, it is often all kinds of blue chips. After the rise of heavyweights, growth stocks began to perform.
China Merchants Securities Co.Ltd(600999) Liao Zhiming’s team believes that the valuation switching market at the end of the year is worth looking forward to. Although the downward pressure on the economy is still large, pessimistic expectations have been reflected in the valuation of bank stocks. At present, the valuation of the banking sector is at a historical low, the fundamentals are stable and good, and the profit growth rate is expected to maintain a good level in recent five years. Superimposed on the valuation switch at the end of the year, the banking sector may usher in a slight repair of valuation.
reducing reserve requirements and thickening bank profits
In addition to the end of the year factors, the RRR reduction is an important driver of the continuous performance of bank stocks. This is a comprehensive RRR reduction rather than a targeted RRR reduction, and the release of long-term funds reached 1.2 trillion, slightly exceeding expectations.
According to the estimation of Liao Zhiming’s team, the RRR reduction can reduce the cost of banks by about 15 billion a year, which is conducive to keeping the loan interest rate low and continuously supporting the real economy. The RRR reduction will help to improve the currency multiplier and enhance the bank’s credit extension capacity. At the end of October 2021, the monetary multiplier was 7.42. After the RRR reduction, the weighted average legal reserve ratio of financial institutions decreased to 8.4%, which will further improve the monetary multiplier and enhance the bank’s credit extension ability. Since May 2021, the continuous rise of commodity prices has caused the middle and lower reaches of small and micro enterprises to face operating pressure. The RRR reduction is expected to enable banks to increase the scale of credit supply and alleviate the operating pressure of small and micro enterprises.
as of the third quarter of 2021, the net profit of listed banks totaled 1.47 trillion. According to static calculation, it can increase the net profit of listed banks by about 0.39%. Considering that some funds may be used for credit, it is expected that the actual impact of the RRR reduction on bank profits will be higher than 0.39%.
what about bank stocks in 2022?
Investors are very concerned about how to invest next year.
Guosen Securities Co.Ltd(002736) Wang Jian, chief analyst of banking industry, believes in the latest report that with China’s economic development and transformation, the demand faced by banks has changed, the growth rate of infrastructure and real estate investment has fallen, and the importance of manufacturing industry has become prominent. Changes in demand have brought changes in bank investment opportunities. In the future, we should focus on banks located in areas with developed manufacturing industry and good at serving manufacturing industry.
The manufacturing industry in different regions is unevenly distributed, and the manufacturing industry in the Yangtze River Delta and Pearl River Delta is more developed. It is suggested to focus on the Yangtze River Delta, especially Jiangsu Province, where there are many regional listed banks.
From the perspective of the key drivers of Bank net profit growth, it is expected that the overall industry fundamentals will remain stable and maintain low-speed growth in 2022.
Since this year, with the end of the repricing of stock loans and the decline of the overall interest payment rate of deposits brought about by the reform of deposit self-discipline pricing mechanism, the net interest margin of banks has gradually stabilized. As the net interest margin has continued to decline before, when the net interest margin stabilizes, the growth rate of bank income is expected to rise slightly.
In recent years, listed banks have carried out large-scale non-performing recognition and disposal, and the potential risk has been reduced. With the sharp rise of PPI this year, the profits of industrial enterprises have improved significantly, and the generation rate of bank non-performing loans has also decreased. Although the probability of further increase of PPI is very low next year, so it is difficult for the bank to continue to improve the non-performing generation rate. However, due to the clearing of non-performing stocks and the provision “surplus” brought by the vigorous provision for asset impairment losses in the past few years, the bank has the ability to calmly deal with the pressure of asset quality.
According to Ma Kunpeng’s team of China Securities Co.Ltd(601066) securities, there are three main lines of investment in the banking industry in 2022, and banks with excellent fundamentals and smooth medium and long-term logic are preferred.
The first main line is “big wealth + big investment bank”, which is not only a high-quality track with thick snow in Changpo, but also the only way for the transformation and development of banks and seeking the second growth curve. It focuses on excellent joint-stock banks with good customer base, strong team ability, flexible and efficient product and organizational structure.
The second main line is to focus on banks in high-quality regions. At present, China’s economic region has obvious structural characteristics. According to the three competitive advantages of urban commercial banks (business region, competitive pattern and light capital business ability) and the 3 + 1 Evaluation System of an important foundation (Corporate Governance), we focus on the three good banks of “good region + good identity + good performance”.
The third main line is to focus on Pratt & Whitney small and micro businesses. Pratt & Whitney’s small and micro businesses directly serve the capillaries of the economy. They are not only encouraged by supervision, but also have long-term development potential. Under the background of ecological optimization, select banks from “the best” and “a piece of white paper has not been done”.
(brokerage China)
