The banking sector stabilized and rebounded after a sharp decline in the index this week (3.7-3.11), with a P / b of lf0.5 as of the last trading day of this week 62pb, with a significant decline in valuation compared with last weekend and an increase in market heat. The average daily trading volume was 1086.4 billion yuan (mom + 12.3%). This week, the central bank’s wide caliber (including 7-day reverse repo) net recovery was 330 billion yuan, and the 7-day reverse repo interest rate remained at 2.10%. The overall liquidity was at a good level; On Friday (March 11), it was announced that the weighted value of dr007 was 2.10%, which was equivalent to the reverse repurchase level. The overall liquidity was good, and the guidance level of interest rate was well conducted.
Peripheral emotional transmission intensifies, and confidence is more important than gold. This week, the valuation level of China Citic Bank Corporation Limited(601998) sector, along with the sharp decline of the whole market, slightly lost the performance of Shanghai and Shenzhen 300 index, which deviated from the expectation at the beginning of the week. During the working day of this week, the overall A-shares continued to be affected by the suppression of global financial risks caused by the risk event of “Russia Ukraine conflict”. Due to the demand for risk avoidance and the significant increase in the prices of related commodities (non-ferrous metals such as crude oil, aluminum and nickel and Shenzhen Agricultural Products Group Co.Ltd(000061) etc.), the global equity market retreated sharply. The continuous risk disclosure, financial sanctions and big country game have exacerbated the expectation of uncertainty in the global economy. In addition, with the spread of the epidemic in China, especially the highly contagious impact of Omicron, the market will be worried about the process of economic recovery. The continuous impact of internal and external pressure has greatly suppressed the equity market and banking sector. We believe that at this stage, Investors’ confidence is more important than gold. They believe that the stock price has greatly reflected the above risks and uncertainties in the past period, and even oversold. This week, a number of state-owned banks announced their operations in the first two months of 2022. On the basis of their excellent performance in 2021, the overall operation made steady progress, the growth of deposit and loan business was better than that in the same period, and achieved a good start, reflecting the good operation of the banking industry. We have firm confidence in the development of the banking industry.
The central bank turns over the balance profits to ensure people’s livelihood and promote development. On March 8, the central bank announced that, in accordance with the spirit of the central economic work conference and the deployment of the government work report, it would turn over the balance profits to the central finance, with a total amount of more than 1 trillion yuan, which would be mainly used to offset tax rebates and increase transfer payments to local governments, so as to support the relief of enterprises, stabilize employment and ensure people’s livelihood. The reserve mode of macro-control policy enhances policy flexibility and reflects the diversity of macro-control policy. This model is in line with the international common practice of the central bank to turn in profits, and the fund has a special purpose, which reflects the central bank’s consistent idea of precise policy implementation, accurately docking with enterprises in need, and injecting new vitality into the economy. The profits handed over by the central bank do not form fiscal non tax revenue, so it will not bring about the expansion of the balance sheet. It has a certain credit easing effect, reflecting the synergistic effect with the active fiscal policy. With continuous policy support, we believe that the banking industry has good profit expectations and great room for valuation improvement, and maintain the “recommended” rating.
Market performance
The banking sector index fell 4.61% this week, weaker than the market. This week, the Shanghai Composite Index fell 4%, the Shenzhen Component Index fell 4.4%, the gem index fell 3.03%, and the Shanghai and Shenzhen 300 index fell 4.22%. The recommendations focus on high-quality joint-stock banks ( ‘ Tsingtao Brewery Company Limited(600600) 36 , Bank Of Nanjing Co.Ltd(601009) , Bank Of Shanghai Co.Ltd(601229) , Shanghai Rural Commercial Bank Co.Ltd(601825) and Jiangsu Changshu Rural Commercial Bank Co.Ltd(601128) , Jiangsu Zhangjiagang Rural Commercial Bank Co.Ltd(002839) ).
Risk tips
Repeated epidemic risk, tightening monetary policy, increasing risk of non-performing rate, outbreak of major risks and events of default, etc.
