Market performance:
In the current period (2022.3.7-2022.3.11), the non bank (Shenwan) index was – 5.58%, ranking 25 / 31 in the industry, the brokerage II index was – 5.41%, and the insurance II index was – 6.29%; Shanghai Composite Index – 4.00%, Shenzhen Component Index – 4.40%, gem index – 3.03%. The top five stocks in terms of rise and fall: Chinalin Securities Co.Ltd(002945) (+ 14.32%), Caida Securities Co.Ltd(600906) (+ 5.75%), Yong’an Futures (+ 3.93%), Sunny Loan Top Co.Ltd(600830) (+ 2.35%), Anxin Trust Co.Ltd(600816) (+ 1.17%); The top five stocks in terms of rise and fall: Easy Visible Supply Chain Management Co.Ltd(600093) (- 11.83%), Kunwu Jiuding Investment Holdings Co.Ltd(600053) (- 9.80%), Panda Financial Holding Corp.Ltd(600599) (- 9.25%), China Life Insurance Company Limited(601628) (- 9.00%), Shanghai Greencourt Investment Group Co.Ltd(600695) (- 8.59%).
Core view
Brokerage: this week, the brokerage sector has fallen by 5.41%. Since the beginning of the year, the brokerage sector has fallen by 19.33%, significantly underperforming the Shanghai Composite Index and the Shanghai and Shenzhen 300. The reason for the poor performance of the securities sector is that, on the one hand, a series of external factors such as the conflict between Russia and Ukraine and the US interest rate hike have suppressed the market sentiment. The overall market performance this week is sluggish, and the securities sector is difficult to survive. On the other hand, since the beginning of the year, the market activity has decreased, the stock and bond market has shaken down, and the fund issuance has been cold. It is expected that the securities brokerage The performance of the two core businesses will be affected, and the market’s expectations for securities companies, especially the wealth management track, are generally pessimistic.
At present, the valuation of Pb in the securities sector is 1.44 times, lower than the 20 quantile since 2016, at the bottom of history, which deviates greatly from the performance. We believe that the external impact and the cooling of wealth management business are short-term factors, so we should not worry too much. On the one hand, as of March 11, the net profit attributable to the parent of 24 listed securities companies that have released performance forecast or performance express has increased year-on-year. In addition, the overall performance of the securities industry in 2021 has been continuously enhanced through the release of the annual performance data of the securities industry in 2021. On the other hand, under the background of deepening the reform of the capital market and the transfer of residents’ wealth to equity products, securities companies have benefited for a long time. On the afternoon of March 11, the securities companies rose due to changes, Boc International (China) Co.Ltd(601696) , Chinalin Securities Co.Ltd(002945) , China International Capital Corporation Limited(601995) and so on, which significantly boosted the mood of the whole market. Combined with the performance of securities companies, the main line of “stable growth” of the economy and the general trend of capital market reform of the full implementation of the registration system, the securities sector is seriously underestimated, and it is suggested to bargain hunting layout.
Insurance: this week, the insurance sector fell 6.29%, underperforming Shanghai and Shenzhen Sunwoda Electronic Co.Ltd(300207) PCT, underperforming Shanghai Composite Index by 2.29 PCT, with Ping An Insurance (Group) Company Of China Ltd(601318) , The People’S Insurance Company (Group) Of China Limited(601319) , New China Life Insurance Company Ltd(601336) , China Pacific Insurance (Group) Co.Ltd(601601) 601 and China Life Insurance Company Limited(601628) falling by – 5.91%, – 3.66%, – 7.16%, – 8.14% and – 9.00% respectively. The overall sector is in the doldrums.
With the adjustment of the market, the change of style and the enhancement of external uncertainty, the share price of insurance stocks fell sharply this week, which failed to reverse the decline of last week. The whole is still grinding to the bottom, but there is a certain margin of safety for the low valuation level. We think we can pay attention to the structural market.
On the asset side, the policy has recently provided support to buyers, financial institutions and other aspects to reverse the low prosperity of real estate. Although we believe that the real estate market is still in a downward expectation in the short term, with the continuous loosening of the policy, the fundamentals of the real estate market may improve in the future, and the investment side risk of the insurance sector will be gradually mitigated, The financial planning guidance of infrastructure conveyed by the recent two sessions also constitutes a certain support for the investment side of insurance. At present, the yield of 10-year Treasury bond is close to 2.85%. It is expected to rise under the dual effect of subsequent internal steady growth and external interest rate increase, which will benefit the asset side of insurance companies.
On the liability side, even if the margin is improving, we believe that the transformation still has a long way to go. From the premium data in January, the overall pressure state of life insurance has not changed due to the Early Spring Festival holiday, sporadic disturbance of the epidemic and the decline of the scale of agents. For property insurance, the base number in 2021 is low, the data is better, the market concentration is improved, and the products and services are standardized and optimized. From the perspective of residents’ capital flow in 2022, it is difficult for the real estate market to reverse in the short term. The equity market is greatly affected by the mood and style switching. The comparative advantages of annuity insurance and increased life insurance products may be highlighted, which is expected to become a positive factor in the repair of the liability end of the insurance industry.
On March 9, the China Banking and Insurance Regulatory Commission issued the detailed rules for the implementation of the measures for the management of reserves for non life insurance business of insurance companies (No. 1-7). In recent years, there has been an artificial adjustment of reserves in the insurance market, especially in branches, and the phenomenon of adjusting profits through reserves also exists to a certain extent. Some insurance companies have received regulatory letters due to adverse deviations in reserves, Based on these phenomena, the China Banking and Insurance Regulatory Commission issued the measures for the management of non life insurance business reserves of insurance companies in October 2021, and issued the implementation rules again five months later, No. 1-7 are respectively “reserve for unexpired liabilities”, “reserve for outstanding claims”, “risk margin and discount”, “reserve for branches”, “reserve retrospective analysis”, “reserve evaluation report” and “reserve working paper”, which enhances the scientificity, rationality, systematicness and completeness of non life insurance reserve supervision.
On the one hand, in the past practice of reserve provision, leading insurance companies have relatively standardized and high profit authenticity. The introduction of the regulatory rules has little impact on their profits. On the other hand, in the process of deep transformation of insurance companies, the introduction of the rules makes the non life insurance liability reserve more scientific in terms of evaluation backtracking and actuarial methods, It has a certain positive impact on the compensation capacity and liability management of insurance companies.
On the whole, both ends of the negative equity of the insurance sector are improving, and the valuation is low, but the bottom building stage is not over, and the inflection point needs to wait.
Risk tips: strengthened supervision, intensified external market risks, market fluctuations and repeated epidemics
