On March 16, 2022, Premier Liu he chaired a special meeting of the finance committee to study the current economic situation and capital market issues. The meeting of the Finance Committee responded to several major issues: macro economy, real estate enterprises, China concept shares, platform economic governance and the stability of Hong Kong’s financial market. Under the background of the continuous decline of China’s stock market, the meeting delivered a positive signal of stabilizing the macro economy and financial market, which helped boost market confidence and catalyze the upward valuation of the industry. Securities companies face a favorable environment of sustainable policies, which is conducive to the improvement of long-term valuation center, and are optimistic about the trademark of leading and treasury management characteristic bonds.
Clarify the active response of monetary policy and further strengthen the expectation of reducing reserve requirements and interest rates. The meeting stressed that development is the first priority and economic construction is the center. With regard to macroeconomic operation, the meeting pointed out that “keep the economy running within a reasonable range and maintain the stable operation of the capital market”, “effectively revitalize the economy in the first quarter, take the initiative to respond to monetary policies, and maintain a moderate growth in new loans.” The recent geopolitical conflict has promoted the continuous rise of commodity prices, intensified the shock in the global capital market, continued the spread of the overseas epidemic, and the point outbreak of the epidemic in China has increased the pressure on China’s macro-economy. The meeting of the financial committee made clear the keynote of stable economic growth and emphasized the active use of monetary policy tools. It is expected to strengthen the market expectation of reducing reserve requirements and interest rates and stabilize the market expectation of economic development.
We will adhere to financial support for the development of the real economy and are expected to continue to deepen the reform of the capital market. On financial institutions, first, the meeting pointed out that “financial institutions must proceed from the overall situation and firmly support the development of the real economy.” Combined with the central economic work conference in December 2021 and the government work report in 2022, it is expected that the process of comprehensively implementing the registration system and improving the delisting system will be accelerated, so as to expand the financing channels of the real economy and activate the development of high-quality enterprises. The deepening reform of the capital market is conducive to bringing increment to investment banking, direct investment, wealth management, institutional trading and other businesses. Second, the meeting made it clear that “long-term institutional investors are welcome to increase their shareholding ratio”. The increase in the long-term shareholding ratio of institutional investors is conducive to reducing the sharp fluctuations in stock prices caused by speculation and investor sentiment, improving market pricing efficiency and further attracting more funds into the market. It helps to improve the robustness of investment income and valuation of securities companies.
Investment view
The meeting of the Finance Committee delivered the signal of “stabilizing growth and market”, emphasizing that “actively introduce policies beneficial to the market and carefully introduce contractive policies”, which is conducive to catalyzing the upward valuation of the market and industry. 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 the trademarks of leading and treasury management characteristic securities. 1) The reform of the registration system is imminent, which will bring more opportunities to the head investment banks with strong comprehensive ability and their direct investment and follow-up investment 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.
