On March 5, 2022, Premier Li Keqiang delivered the “government work report”, taking steady growth as the keynote of 2022, proposed to strengthen the implementation of prudent monetary policy, adhere to the supply side structural reform as the main line, and laid a stable macro liquidity environment. The registration system reform is also expected to speed up the implementation of this year, which is good for the securities business in many aspects. The report first mentioned the establishment of a financial stability guarantee fund to improve the risk prevention ability of the financial market and help reduce market price volatility. In 2022, securities companies will face a favorable environment of sustainable policies, which will help to improve the long-term valuation center, and firmly value the trademark of leading and treasury management characteristic bonds.
We will intensify the implementation of monetary policy to ensure stable liquidity. Facing the new downward pressure, the report puts steady growth in a more prominent position in 2022, and points out that “strengthen the implementation of prudent monetary policy to provide more favorable support for the real economy” “Promote financial institutions to reduce the actual loan interest rate and reduce charges, so that the majority of market subjects can personally feel the improvement of financing convenience and the real decline of comprehensive financing cost”. According to the fourth quarter monetary policy implementation report, “China’s inflation pressure is generally controllable”, which is more independent than overseas monetary policy, and there is room for further marginal easing, reserve requirements and interest rates reduction. The macro monetary policy is more active and still has room, which is conducive to ensuring steady growth and maintaining reasonable and abundant liquidity.
The reform of the comprehensive registration system is expected to speed up, which will directly benefit a number of businesses of securities companies. The report emphasizes that this year, we will thoroughly implement the innovation driven development strategy and consolidate and expand the foundation of the real economy. As a direct financing bridge for enterprises, investment banks are expected to usher in business increment. In combination with the recent frequent emphasis on the reform of the comprehensive registration system by the state, especially the central economic work conference in December 2021 pointed out that “the reform and opening-up policy should activate the driving force of development and fully implement the stock issuance registration system”. It is expected that the reform of the comprehensive registration system will speed up and is expected to be implemented in 2022, It not only brings direct increment to the investment banking business and direct investment and follow-up investment business of securities companies, but also helps to improve the richness of asset allocation of wealth management business and residents’ investment activity. In addition, the full implementation of the registration system is bound to be accompanied by the gradual improvement of the delisting system. The progress of the market survival of the fittest mechanism will promote the price increase of high-quality enterprises, be conducive to the investment experience and income of value investors, and benefit the investment business of securities companies.
The financial stability guarantee fund was first raised to prevent financial risks. The report points out that “it is necessary to consolidate local territorial responsibilities, departmental regulatory responsibilities and corporate main responsibilities, strengthen risk early warning, prevention and control mechanism and capacity-building, establish financial stability guarantee fund, and use market-oriented and legalized methods to resolve potential risks”. It is the first time to put forward the “financial stability guarantee fund”. In some developed economies, such funds are generally used to rescue and dispose of systemically important financial institutions, or to deal with major financial risk events. The establishment of the financial stability guarantee fund is a supplement to the central bank’s lender of last resort in dealing with systemic financial risks. It helps to improve China’s financial risk prevention ability, reduce the impact of large stock market shocks caused by risk events, reduce the volatility of securities companies’ investment business, and directly reduce the volatility of securities companies’ valuation.
Investment view
Combined with favorable policies, performance differentiation and long-term growth drivers, we continue to be optimistic about the growth prospects of securities companies and continue to recommend leading and financial management characteristic securities trademarks: 1) the reform of registration system is imminent, which will bring more opportunities to head investment banks with strong comprehensive ability and their direct investment and follow-up business. 2) Residents’ wealth continues to accumulate, and the policy of “housing without speculation” is unswerving. The growth trend of wealth management demand for maintaining and increasing residents’ wealth remains unchanged, which can still contribute to the long-term growth of securities companies. Highlight Citic Securities Company Limited(600030) , Huatai Securities Co.Ltd(601688) , China Industrial Securities Co.Ltd(601377) , Orient Securities Company Limited(600958) , China stock market news.
Risk tips
The impact of policy introduction, international environment, epidemic development and market fluctuations on the industry exceeded expectations.
