Summary of this issue:
Core view: the main contradiction in the current market is that the expectation of loose liquidity brought by China’s steady growth has not been reflected in social finance, and the pressure brought by overseas interest rate hikes. We are still optimistic about the spring market. The central economic work conference has given the direction to the current economic situation and future monetary and fiscal policies. At the same time, under the complex international and Chinese macro environment, the liquidity is moderately loose, and the securities 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. The cbcirc issued a notice to promote the development of pension insurance institutions and focus on the main business. The third pillar of pension has once again become the focus of attention, and the insurance asset management business has been limited. At the current time point, industry reform is under way, In our in-depth report “how to solve the worries of agents? Reference brokerage and bancassurance – special report on long-term space of insurance (III)” released last week, we clearly described the current situation and future development trend of the industry. The mismatch between supply and demand is still the main contradiction in the current premium growth, the liability side of insurance enterprises is still under pressure, and the elasticity is still on the investment side. The core targets: Zheshang Securities Co.Ltd(601878) , East Money Information Co.Ltd(300059) , Gf Securities Co.Ltd(000776) China Pacific Insurance (Group) Co.Ltd(601601) , Ping An Insurance (Group) Company Of China Ltd(601318) etc.
Market review: the main indexes fell this week, and the Shanghai composite index reported 3618.05 points, -0.39%; Shenzhen stock index reported 14710.33 points, -1.06%; The CSI 300 index reported 4921.34, -0.67%; Gem 3297.11, – 4.00%; The China Securities composite bond (net price) index reported 99.61, 0 BP. The average daily turnover of A-Shares in Shanghai and Shenzhen stock markets was 1086.042 billion yuan, a month on month increase of – 6.71%, and the balance of two financial services was 1841.58 billion yuan, a year-on-year increase of – 0.02% over last week. In terms of individual stocks, brokers: Soochow Securities Co.Ltd(601555) + 2.83%, Guosen Securities Co.Ltd(002736) + 0.27%, Sealand Securities Co.Ltd(000750) + 0.25%; insurance: China Life Insurance Company Limited(601628) + 0.70%, The People’S Insurance Company (Group) Of China Limited(601319) – 0.21%, China Pacific Insurance (Group) Co.Ltd(601601) – 1.34%; diversified Finance: Rendong Holdings Co.Ltd(002647) + 10.73%, Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) +3.44%， Cnpc Capital Company Limited(000617) +2.98%。
Viewpoint of the securities industry: on December 24, the CSRC issued a statement on the administrative provisions of the State Council on the overseas issuance and listing of securities by domestic enterprises (Draft for comments) (hereinafter referred to as the administrative provisions), And its supporting rules, administrative measures for the filing of overseas securities issuance and listing of domestic enterprises (Draft for comments) (hereinafter referred to as the filing measures) ）Solicit opinions from the public. The draft for comments makes it clear that domestic enterprises, whether they are directly or indirectly issued and listed overseas, or second listed or dual listed, need to file with the CSRC and comply with laws and regulations such as network and data security. When filing, they need to submit regulatory opinions, filing or approval documents issued by industry competent departments, as well as safety assessment and review opinions issued by relevant departments. In addition, if an overseas securities company is engaged in underwriting and recommending the overseas listing of domestic enterprises, it shall report to the CSRC for the record.
More than 50% of domestic businesses need to be filed: there are two standards for the identification of overseas indirect issuance and listing of domestic enterprises: one is that the revenue, total profit, total assets or net assets of domestic enterprises in the latest year account for 50% of the issuer’s audited consolidated financial statements in the same period; the other is that most of the senior managers responsible for business operation and management are Chinese citizens, The main place of business operation is located or mainly carried out in China. According to these two standards, all red chip enterprises, including the vie framework, are required to comply with the new regulations.
The following five situations shall not be listed overseas: 1 There are situations where listing and financing are explicitly prohibited by national laws, regulations and relevant provisions; 2. It is determined by the relevant competent department of the State Council according to law that overseas issuance and listing threaten or endanger national security; 3. There are major ownership disputes over equity, main assets, core technology, etc; 4. Domestic controlling shareholders and actual controllers have committed criminal crimes of embezzlement, bribery, misappropriation of property, misappropriation of assets or destruction of socialist economic order in recent three years; 5. The directors, supervisors and senior executives have been subject to administrative punishment in recent three years, and the circumstances are serious, or they are being filed for investigation by judicial organs due to suspected crimes, or major violations of laws and regulations are being filed for investigation.
In terms of the arrangement of transition period, the supervision adheres to the principle of non retroactivity of the law. First, incremental enterprises and stock enterprises with refinancing shall perform the filing procedures as required, and other stocks shall be arranged separately when the transition period is sufficient. The administrative provisions and filing measures improve the regulatory system, clarify the unified filing management of direct and indirect overseas listing activities of domestic enterprises, establish a coordination mechanism for Overseas Listing Supervision of domestic enterprises, improve cross-border securities regulatory cooperation arrangements, and establish filing information communication and other mechanisms. At the same time, clarify the legal responsibility for non-compliance with filing procedures, counterfeiting of filing materials and other violations, and increase the cost of violations.
The comprehensive registration system is imminent. Residents’ wealth is growing rapidly and there is a strong demand for wealth management. Securities companies’ wealth management will deliver performance, and investment banks and wealth management support steady performance growth. After a large amount of impairment in 2020, the asset quality of listed securities companies has been further consolidated. The current valuation of securities companies is PB1 78 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. Suggestions and concerns: 1. Investment banking: head securities companies with strong asset pricing ability, sales ability and other comprehensive investment banking capabilities: China International Capital Corporation Limited(601995) , China Securities Co.Ltd(601066) , Citic Securities Company Limited(600030) . 2. Wealth management: the core targets benefiting from the expansion of the wealth management market: (1) the China International Capital Corporation Limited(601995) with obvious advantages of products and investment advisers to promote the large-scale development of high-end wealth management; (2) the Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , China Industrial Securities Co.Ltd(601377) benefiting from the high proportion of asset management income + high contribution of participating / holding public funds and excellent products and channels; (3) The company attaches great importance to its strategy and has obvious product end characteristics. It is expected to realize Zheshang Securities Co.Ltd(601878) overtaking in curves.
View of the insurance industry: on December 24, the CBRC issued the notice on standardizing and promoting the development of pension insurance institutions, which mainly put forward requirements from five aspects: development orientation, business direction, risk isolation, rectifying the source and strengthening supervision. 1) Pension insurance institutions should be positioned as professional pension financial institutions, further highlight the characteristics of pension, 2) clarify the business direction, and pension insurance institutions should focus on the development of commercial pension insurance Pension security management and enterprise (occupational) pension fund management and other pension related businesses, 3) strengthen risk isolation, pension insurance institutions should improve corporate governance and organizational structure, and strengthen the construction of information systems, 4) clean up businesses with insignificant pension characteristics, terminate or peel off insurance asset management businesses unrelated to pension, clean up short-term personal pension security management businesses, and support compliance with Qualified institutions carry out business transformation and product innovation of personal old-age security management, 5) strengthen institutional supervision, and supervise the old-age insurance institutions that deviate from the main business, the business pressure drop is not in place, and fail to establish an effective risk isolation mechanism. In view of the existence of pension security management business that is biased towards financial management but the main pension business is not obvious, the notice aims to focus on pension insurance institutions, focus on the main pension business, focus on the development and innovation of pension products, strengthen the supervision of regulatory authorities, better serve the construction of the third pillar pension insurance system and meet the diversified pension security needs of customers.
Looking forward to the first quarter, the liability side: under the comprehensive influence 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, we expect that the pressure on the liability side will still exist this year. 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. On the asset side, the adverse impact of real estate investment on insurance companies has been fully reflected. Affected by the economic downturn, the weight of RRR reduction combined with steady growth in economic operation has increased, and the medium and long-term interest rates are still under downward pressure. 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 PEV of Guoshou, Ping An, Taibao and Xinhua 2021e corresponding to the current stock price are 0.7x, 0.63x, 0.52x and 0.44x respectively.
Liquidity view: in terms of volume, the central bank invested a net 50 billion yuan in the open market this week, including 100 billion yuan in reverse repurchase and 50 billion yuan in return. 50 billion yuan of reverse repurchase will expire next week. In terms of price, the short-term capital interest rate fell this week. The weighted average inter-bank offered rate decreased 2bp to 1.96%, and the inter-bank pledged repo rate increased 8bp to 2.03%. R001 down 2bp to 1.88%, R007 down 22bp to 2.07%, dr007 down 22bp to 1.90%. Shibor’s overnight interest rate fell 2bp to 1.84%. Interbank certificates of deposit issue interest rates vary. The yield of one-year treasury bonds rose 3bp to 2.34%, the yield of 10-year Treasury bonds fell 3bp to 2.82%, and the term interest margin narrowed 6BP to 0.48%. Considering that the central economic work conference mentioned that the importance of steady growth has increased, the policy has been relaxed and overweight, and the recent epidemic has gradually become severe, there will still be downward pressure on medium and long-term interest rates in the future. In the follow-up, we still need to pay attention to the process of widening credit and opening the tightening cycle in the United States.
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.
