On March 2, 2022, the State Council Information Office held a press conference on promoting a virtuous cycle of economy and finance and high-quality development. Mr. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, introduced the situation of promoting a virtuous cycle of economy and finance and high-quality development and answered questions.
The implicit government debt and the real estate bubble will be reversed, and the risk prevention should be shifted to increase lever and steady growth.
Guo Shuqing summarized the results of resolving financial risks in the past five years. The main indicators were significantly improved, including the decline of macro leverage, the slowdown of asset expansion of financial institutions, the sharp pressure drop of shadow banks and the sharp liquidation of non-performing disposals. And mentioned that “the recessive debt situation of local governments tends to improve, and the real estate bubble financial momentum has been fundamentally reversed.” “Now the price of real estate has been adjusted and some changes have taken place in the structure of demand”, “but we don’t want the adjustment to be too drastic and have a great impact on the economy. We still need a smooth transformation.”
Monetary policy is loose and matched with fiscal and structural policies to support consumption and investment
Guo Shuqing made it clear that financial institutions supporting entities “should not simply engage in flood irrigation and expand the degree of easing of monetary policy. Finance should also play a role and increase specific measures for structural adjustment.” the banking and insurance industry “should more specifically support the expansion of consumption and investment”. It also mentioned three aspects: continuing to support small and medium-sized enterprises, supporting the revitalization of rural areas and doing a good job in financial services for new citizens.
Support financial institutions to serve new citizens and encourage consumption and residents to leverage
Guo Shuqing mentioned that he would follow up or issue a document to support the financial services of “new citizens”, making it clear that this part of the population is about more than 300 million. The “new citizens” will provide financial services support in terms of credit and other aspects in terms of their needs in living and working in peace and contentment, employment and entrepreneurship, renting and buying houses, children going to school, elderly care and so on. The development of new financial services is also mentioned. This is in line with the bank’s current direction of actively developing retail credit, which may sink more in the customer base, and pay attention to the introduction of subsequent relevant documents.
The Internet financial business has been rectified smoothly and will be gradually brought into regulation. Pension finance may be promoted steadily.
The press conference mentioned that the financial businesses involved in 14 Internet enterprises such as ant group continued to be rectified and gradually incorporated into supervision. In terms of endowment insurance, the press conference mentioned that: the development of endowment insurance related businesses is fast, and the development of the third pillar lags behind. Compared with European and American insurance and banks, it still lags behind in endowment insurance. Reaffirm the policy of “jogging in small steps and overall gradual progress”, and the relevant measures of pension finance may be steadily promoted in the future.
Reiterate the view that steady growth and steady real estate continue to catalyze, and firmly optimistic about the bank market. The existing data and indicators reflect that the macro demand and real estate are still weak. When the effectiveness of the existing policies is limited, it may not be too pessimistic to follow. The economy has a cycle, the policies have goals, and there is greater possibility and space for upward in a lower position. The goal of steady growth is clear, there is room for policy strength, and it takes time to achieve results. Recent statements such as sustained steady growth, stable real estate and leverage may continue to catalyze the bank market, make policy efforts and achieve results, and data improvement may continue to appear. Compared with other stable growth varieties, the bank has lower valuation, limited increase in the early stage and greater upward space in the future.
In terms of individual stocks, it is recommended to pay attention to urban and rural commercial banks with rapid performance growth, such as Bank Of Jiangsu Co.Ltd(600919) , Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Bank Of Hangzhou Co.Ltd(600926) , etc. continuous recommendation of core targets: Bank Of Ningbo Co.Ltd(002142) , China Merchants Bank Co.Ltd(600036) , Postal Savings Bank Of China Co.Ltd(601658) .
Risk tip: the deterioration of asset quality caused by economic downturn exceeded expectations.
