From a financial perspective, what do you think of the 22-year two sessions and the government work report?
1) macro: GDP has a clear target of 5.5%, and the steady growth policy is expected to continue to increase.
National: "the report" emphasizes that the GDP growth target of 5.5% takes into account the requirements of "stabilizing employment, ensuring people's livelihood and preventing risks" and the 14th five year plan. It is "medium and high-speed growth on a high base, which reflects the initiative and requires hard work". From this perspective, economic growth in 2022 is clearly "with a bottom line", and the steady growth policy is expected to continue to increase. Specifically, the deficit ratio is 2.8%, and the scale of fiscal expenditure is 2 trillion more than that of the same period last year; Central to local transfer payments increased by about 15 trillion yuan, an increase of 18%, the largest increase in many years; Local government special bonds remained at 3.65 trillion yuan, strengthened performance orientation, and supported follow-up financing of projects under construction.
Local: previously, the GDP target announced by most provinces was more than 5.5%. At present, the target of major provincial projects announced by 21 provinces has been increased (the annual investment plan is 11.5 trillion, and most provinces are more than 10% year-on-year), and has been accelerated recently (according to the statistical summary of Mysteel and national development and Reform Commission data, the total investment of national projects started in January was nearly 5 trillion, an increase of 68% year-on-year).
Overall, there is a bottom line for economic growth, policies are expected to increase, projects are actively promoted, and relevant credit demand is expected to pick up in the future, so as to enhance the expectation of "stable economic growth".
2) Social Finance Credit: it is clear to "expand the scale of new loans" this year. This government work report (hereinafter referred to as the "report") proposes to "expand the scale of new loans" on the basis of "maintaining the matching of money supply and social finance with GDP", and the loan investment of the whole industry this year will not be less than 20 trillion (the scale in 2021), which will form a strong support for social finance in 2022. In terms of rhythm, the "report" has repeatedly emphasized that policies and work should rely on the front force, local projects should be actively promoted (bring demand), and banks should "invest early and earn early". Focus on:
A. Pratt & Whitney small and micro enterprises: make good use of Pratt & Whitney small and micro loan support tools (it has changed from epidemic policy to normalization tools in 2022) and increase re loans for agriculture and small and micro enterprises. In 2022, the required volume should increase significantly, the coverage should be expanded, and the number of first loan households should be increased (compared with last year, the number of large banks is required to increase by more than 30%, and it is emphasized that the comprehensive financing cost of small and micro enterprises must be reduced steadily, and the requirements are more moderate). By the end of 2021, the balance of inclusive small and micro loans has reached 19 trillion, accounting for 10% of the total loans. In the future, the industry will grow steadily on a high base, The competitive environment of small and micro enterprises will also enter the "steady state";
B. manufacturing industry: continue to guide the increase of medium and long-term loans in manufacturing industry and promote industrial upgrading;
C. Rural Revitalization: strengthen rural financial services and infrastructure construction such as water, electricity, gas, letter and mail;
On the whole, with the support of factors such as the expansion of credit (no less than 20 trillion) in 2022 and the expiration of the new asset management regulations, the pressure drop off the balance sheet has slowed down, the steady growth of Finance and the increase of government bonds, it is expected that the growth rate of social finance credit is expected to maintain a high growth rate. It is predicted that the growth rate of social finance will be at least more than 10.5%, supporting the expansion of bank scale, Enhancing the expectation of "supporting economy" will become the "basic market" of bank stocks.
3) our view: the "two sessions" will enhance the expectation of steady growth and continue to be optimistic about the banking sector.
From top to bottom, from the perspective of industry logic:
A. since the end of last year, the growth rate of social finance credit has stabilized and rebounded slightly, which is more positive at the financing supply side. However, whether the economy can achieve wide credit and whether the financing demand, especially the medium and long-term financing demand, can be substantially improved is the key to whether bank stocks can achieve absolute and excess returns at the same time. The two sessions and the "report" have officially set the tone. In the future, the steady growth policy is expected to continue to increase, and the financing demand side is expected to continue to improve.
B. if disturbed by overseas interest rate hikes in the future, bank stocks can often obtain relative returns due to the upward expectation of interest rate, good interest margin and performance.
C. The financial sector is about to enter the performance intensive release period (the annual report will be released next week Ping An Bank Co.Ltd(000001) to be released). At present, the revenue and profit of 22 banks that have disclosed the performance express report have maintained high growth (the growth rate in the whole year of 21 is 10.1% and 19.9% respectively), the overall non-performing rate is 1.13%, which has continued to decline by 3bps compared with the end of September, and the provision coverage has increased by 3.4pc to 287.2%, Good performance or continuous formation of catalysis.
Selected "small" stocks β "Combination" will bring more opportunities:
A. high quality bank, through the cycle, with high performance, and the growth is expected to continue - Bank Of Ningbo Co.Ltd(002142) ;
B. small and medium-sized banks in regions that benefit from steady growth and have strong willingness to convert convertible bonds into shares - Bank Of Chengdu Co.Ltd(601838) , Bank Of Nanjing Co.Ltd(601009) , Bank Of Hangzhou Co.Ltd(600926) , etc;
C. undervalued + marginal improvement banks - Postal Savings Bank Of China Co.Ltd(601658) (the most growing large state-owned bank, with new space brought by the promotion of market-oriented reform by the management), Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) (the competition of small and micro businesses has entered a new "steady state", with stability and upward flexibility)
D. stable employment and growth, and high-quality retail banks are expected to usher in repair opportunities - China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) . Since the end of last year, affected by macro factors such as increasing downward pressure on the economy, rising unemployment rate and still under pressure on consumption, the share price performance of retail banks has been weaker than that of the industry since the beginning of the year (China Merchants Bank and Ping An - 0.02% and - 6.98% respectively). This "report" emphasizes the contents of stabilizing consumption, stabilizing employment and increasing income. After the effect of the steady growth policy is really shown, consumption is expected to stabilize. The current valuation of the two retail banks has high cost performance and has room for rebound.
What are the concerns of strengthening "new citizens" financial services?
The central bank and the China Banking and Insurance Regulatory Commission issued the notice on strengthening the financial services of new citizens, which starts from nine aspects to strengthen the "financial services of new citizens". The key contents include:
1) the new citizen: the group that has not obtained local registered residence or has not been in full three years (currently about 300 million persons).
2) expand financial supply, such as: A. bring new citizens into the scope of entrepreneurship guarantee loan support, and implement guarantee, discount and other policies; B. Increase financial support for small and micro enterprises that attract more new citizens for employment (increase loan support, encourage cooperation between policy banks and commercial banks, etc.); C. Improve the insurance guarantee level of new citizens' Entrepreneurship and employment, and so on.
3) meet the reasonable housing needs of new citizens: A. increase the supply of affordable housing (increase credit support, trust company compliance support, encourage the development of project quality assurance insurance, etc.); B. Support the development of housing rental market; C. Meet the reasonable demand of new citizens for house purchase credit (reasonably determine the first set of standards, improve loan convenience), etc.
4) improve the level of insurance coverage for new citizens, including improving the level of health insurance services (developing universal health insurance products that are not linked to registered residence, encouraging short-term workers in temporary groups, strengthening product innovation, encouraging group health insurance products for the enterprises, and directly settling the medical expenses in other places). Enrich pension financial service products (reasonably meet the financing needs of pension service institutions, promote new municipal elderly care insurance, and promote the construction of the third pillar of pension insurance).
5) other aspects: optimizing financial services for the education of children of new citizens, optimizing basic financial services (such as account management, credit inquiry, exploring and developing financial products such as bank guarantee for migrant workers' wages), etc.
Regular data tracking:
Equity market tracking: 1) trading volume: the average daily turnover of stocks this week was 0.97 trillion yuan, a decrease of 93.934 billion yuan compared with last week. 2) Two financing: the balance of two financing was 1.73 trillion yuan, a decrease of 0.18% over last week. 3) Fund issuance: non monetary funds issued 39.437 billion shares this week, an increase of 26.809 billion month on week. Since March, a total of 35.085 billion shares have been issued, a year-on-year decrease of 246687 billion. Among them, the stock type was 2.065 billion, a year-on-year decrease of 33.751 billion, and the hybrid type was 11.887 billion, a year-on-year decrease of 177324 billion.
Interest rate market tracking: 1) interbank certificates of deposit: A. volume: according to wind data, the issuance scale of interbank certificates of deposit this week was 0.36 trillion yuan, a decrease of 0.29 trillion yuan compared with last week; Since March, the issuance scale of interbank certificates of deposit has been 0.32 trillion yuan, a decrease of 1.61 trillion yuan compared with the end of last month; B. Price: the issuing interest rate of interbank certificates of deposit this week was 2.54%, up 3bp from last week; So far this month, the issue interest rate is 2.54%. 2）
Bill interest rate: this week, the 3-month discount rate of bank notes of large state-owned banks + joint-stock banks was 1.78%, up 9bps from last week; Since March, the interest rate has been 2.14%, up 3bps month on month. The three-month bank note discount rate of urban commercial banks was 1.99%, down 5bps from last week. Since March, the interest rate has been 2.28%, down 3bps from last month. 3) Yield of 10-year Treasury bonds: the average yield of 10-year Treasury bonds this week was 2.81%, down 1bp from last week. 4) Issuance scale of local government special bonds: 88.022 billion new special bonds were issued this week, a decrease of 106140 billion from last week. Since the beginning of the year, 877519 billion local government bonds have been issued. The amount of local government bonds approved in advance in 2022 is 1.46 trillion.
Risk tip: the risks of real estate enterprises erupted intensively, the steady growth policy was less than expected, and the macro-economy went down; The promotion of capital market reform policy is less than expected; The sales of guaranteed products of insurance companies were lower than expected.
