Market performance:
In the current period (March 14, 2022-march 18, 2022), the non bank (Shenwan) index was + 1.68%, ranking 2 / 31 in the industry, the brokerage II index was + 2.05%, and the insurance II index was + 1.18%; Shanghai Composite Index - 1.77%, Shenzhen Component Index - 0.95%, gem index + 1.81%. The top five stocks in terms of rise and fall: Anhui Xinli Finance Co.Ltd(600318) (+ 20.97%), Guosheng Financial Holding Inc(002670) (+ 14.85%), Boc International (China) Co.Ltd(601696) (+ 13.67%), Polaris Bay Group Co.Ltd(600155) (+ 13.25%), Shanghai Chinafortune Co.Ltd(600621) (+ 11.52%); The top five stocks in terms of rise and fall: Bode Energy Equipment Co.Ltd(300023) (- 4.56%), Cnpc Capital Company Limited(000617) (- 4.32%), Zhejiang Orient Financial Holdings Group Co.Ltd(600120) (- 4.10%), Lakala Payment Co.Ltd(300773) (- 3.56%), Sichuan Western Resources Holding Co.Ltd(600139) (- 3.14%).
Core view
Brokerage: the brokerage sector rose 2.05% this week. In the first two days of this week, A-Shares fell sharply, while Hong Kong shares and China concept shares also fell sharply, which brought great impact and panic to the market. On March 16, the financial stability and Development Committee of the State Council held a special meeting to study the current economic situation and capital market issues, involving a number of market key issues such as macro-economy, real estate, platform economy, China concept shares and the stability of Hong Kong's financial market. On the same day, the party, the two sessions and many ministries and commissions spoke out one after another, and favorable policies came out frequently, which greatly boosted investor confidence.
1. Cultivate inner self and bustle outside to boost morale. Since the beginning of the year, A-Shares have faced domestic and foreign troubles, and the market has always been in a depressed and sensitive mood. The external pressures such as the conflict between Russia and Ukraine, the US dollar interest rate hike and the friction between China and the United States and the internal risks such as China's economic growth and repeated epidemics have combined the stimulation of the large outflow of foreign capital to the market in recent two weeks, and the pessimism of the Chinese market has been exaggerated to a high point. The meeting of the Finance Committee on March 16 directly faced the concerns. On the one hand, it stressed to maintain the stable operation of the capital market, take the initiative to respond to monetary policy and maintain a moderate growth in new loans. On the other hand, it shows that the regulators of China and the United States have maintained good communication, and will strengthen the communication and cooperation between the regulators of the mainland and Hong Kong. This statement has greatly boosted the morale of a shares, Hong Kong shares and China concept shares. In order to ensure steady economic growth, monetary policy is expected to be further overweight, new loans are also expected to further stimulate the activity of the real economy, and brokerage and proprietary business of securities companies highly related to market volatility and liquidity are the first to benefit.
2. Sufficient asset allocation options. The real estate policy is relatively loose, and the closely related financial products have a certain boost. On the same day, the cbcirc proposed to focus on supporting high-quality real estate enterprises to merge and acquire high-quality projects of difficult real estate enterprises. For securities companies, on the one hand, the relaxation of real estate policy is conducive to the asset allocation choice of securities companies' financial products, and the risk is more controllable; On the other hand, some securities companies are expected to enrich the project reserves of real estate and asset management businesses such as mergers and acquisitions. At the same time, on March 17, the raising of public REITs and the implementation of public REITs pilot project of affordable rental housing further enriched the choice of asset allocation of self operated and asset management businesses of securities companies on the basis of abundant financing channels of affordable housing and injecting vitality into the real estate market.
3. The CSRC releases the signal of "maintaining stability". On March 16 and 17, the CSRC held an enlarged meeting and Party committee meeting for two consecutive days, and proposed to improve the bond financing support mechanism of private enterprises, encourage listed companies to increase their holdings of repurchase, guide fund companies to purchase their own shares, and strengthen cooperation with the Hong Kong market. The voice of the CSRC once again injected a booster into the market. The repurchase of listed companies and the self purchase scale of fund companies increased the value of equity asset allocation. In March, the asset management of several securities companies such as Everbright asset management and Huatai asset management also increased the self purchase share. At present, the valuations of Hong Kong stock market and A-share market have entered a historical low, and the medium and long-term investment value is prominent, which is expected to bring incremental benefits to the asset management business of securities companies. At the same time, the smooth financing of private small, medium and micro enterprises once again emphasizes that the investment banking business has a large growth space. For securities companies, to fully maintain the smooth operation of the capital market is not only to strengthen risk prevention and control, but also to usher in many development opportunities.
4. The "standard reduction" within the securities industry. On March 17, CSDCC issued a notice to reduce the payment proportion of the minimum settlement provision for stock business from 18% to 16% from April 2022. The reduction of the payment ratio is conducive to abundant cash flow of brokerage business and self operated business, making securities companies more active in asset allocation, improving the efficiency of capital use of securities companies and activating the capital market. Specifically, according to the operating data of 2021 released by China Securities Association, the ending balance of customer transaction settlement funds (including credit transaction funds) in 2021 is 1.90 trillion yuan, so the securities industry can release up to 38 billion yuan a year, accounting for 1.48% of the net assets of the industry. In terms of proportion, this policy has limited contribution to the profits of securities companies. Combined with other policies of reducing or reducing multiple fees issued by China Clearing, it is more inclined to be used as an auxiliary policy to boost market confidence.
5. The three exchanges are "free" again. From March 17 to 18, the three exchanges successively released the reduction and exemption of the initial listing fee and annual listing fee in 2022 in some regions, as well as the online voting service fee of the 2022 general meeting of shareholders. This policy directly benefits the investment banking business of securities companies, helps to further enrich the reserves of investment banking projects of securities companies and improve the scale of direct financing.
On the whole, a large number of favorable policies issued at the special meeting of the financial committee convey the country's strong determination to stabilize the smooth operation of the capital market, which plays a significant role in boosting confidence in the market. For securities companies, brokerage business and proprietary business benefit the most. In addition, the good news related to REITs also significantly benefits the asset management business and wealth management business of securities companies. It is suggested to pay attention to leading securities companies with strong capital allocation ability and strong asset strength, such as Citic Securities Company Limited(600030) , Huatai Securities Co.Ltd(601688) , etc. In addition, the current valuation adjustment of wealth management targets has been basically in a historical position, and they are optimistic about low wealth management advantage securities companies for a long time, such as China stock market news, Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , etc.
Insurance: the insurance sector rose 1.18% this week, outperforming Shanghai and Shenzhen Beijing Jiaxun Feihong Electrical Co.Ltd(300213) PCT, outperforming Shanghai Composite Index by 2.96 PCT, 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) by 1.68%, 0.89%, - 2.17%, - 2.36% and 1.46% respectively, easing the decline compared with last week, but still not out of the downturn.
Recently, A-Shares have rebounded from the bottom, fluctuated greatly, and the market has been constantly adjusted. The insurance sector is still grinding the bottom as a whole, but there is a certain margin of safety for the low valuation level. We think we can pay attention to the structural market.
Listed insurance companies successively announced the original premium income from January to February. For life insurance, the original premium income of China Life Insurance Company Limited(601628) , Ping An Life, PICC Life, CPIC life and Xinhua life was 241.2 billion yuan, 128.8 billion yuan, 53.4 billion yuan, 73.9 billion yuan and 46.4 billion yuan, up from - 5%, - 1.6%, + 26.4%, + 2.3% and + 5.2% year-on-year.
The People'S Insurance Company (Group) Of China Limited(601319) 's higher increase comes from the single premium, with a year-on-year increase of 133%. The fixed-term payment that contributes to the value of new business decreased by 10.2% in the first year. From the perspective of asset liability ratio and maintaining solvency, the high growth of single premium is unsustainable, and it is expected that the follow-up structure will be further adjusted Ping An Insurance (Group) Company Of China Ltd(601318) and China Life Insurance Company Limited(601628) still fell slightly. Product iteration, agent team clearing, and the obstruction of the epidemic made the original premium income of life insurance from January to February lower than expected.
For property insurance, the original premium income of Ping An Property Insurance, PICC Property Insurance and CPIC property insurance was 47.5 billion yuan, 91.8 billion yuan and 31 billion yuan respectively, with a year-on-year increase of + 11%, + 13.6% and + 15.7%. Both auto insurance and non auto insurance have increased, and the structure has been further optimized. The overall performance is better than that of life insurance. However, affected by the comprehensive reform of auto insurance in 2021, the base number in the same period is low. Behind the year-on-year growth, we should continue to pay attention to the product types and business details of head insurance enterprises.
On March 16, the financial supervision commission of the State Council held a meeting to further emphasize the wide currency and stable growth, and put forward new requirements for the stable development of the capital market and the prevention and resolution of real estate market risks. The cbcirc immediately held a special meeting to deploy relevant work, requiring to give full play to the advantages of long-term investment of insurance funds, guide insurance institutions to allocate more funds to equity assets, and timely respond to hot issues concerned by the market, Stabilize market expectations. The further resolution of risks in the real estate market and the fine-tuning of asset allocation constitute a certain support for the improvement of the investment side of insurance, and the yield of 10-year Treasury bonds is expected to rise under the dual effects of subsequent internal steady growth and external interest rate increase, which will benefit the asset side of insurance companies.
The overall pressure state of the insurance liability side has not fundamentally changed, but because it is difficult to reverse the real estate market in the short term, the equity market is greatly affected by the emotional side and style switching, and the direction of residents' wealth allocation is slowly changing. 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 side of the insurance industry.
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
