Market Review
Last week (4.6-4.10), securities, insurance and diversified finance sectors rose or fell by – 0.4%, + 0.5% and – 1.9% respectively. The Shanghai Composite Index, Shenzhen Composite Index and gem rose or fell by + 0.3%, – 2.21%, – 2.4% respectively, and the Shanghai and Shenzhen 300 fell by 1.1%. The excess returns of securities, insurance and diversified financial sectors relative to Shanghai and Shenzhen 300 were + 0.6%, + 1.6% and – 0.8% respectively. Since the beginning of 2022, securities, insurance and diversified finance sectors have fallen by 18.3%, 4.1% and 9.0% respectively.
Core view
Securities: over the weekend, the epidemic situation in many places showed an upward trend, the pessimistic expectation of economic fundamentals warmed up again, and the pressure of steady growth gradually appeared. The executive meeting of the State Council held on Wednesday stressed the need to implement a prudent monetary policy and maintain reasonable and abundant liquidity. The four quotations of the securities companies in the past ten years are mostly based on the loose monetary environment, and the securities companies’ quotations can be expected in the future. Due to the opening of the external interest rate increase cycle and the repeated epidemic in China, the bottom of the market fluctuates, and it still takes time to improve market confidence. We should pay more attention to the high growth securities companies whose internal wealth management business drives performance growth;
Insurance: liability side: in March, all insurance companies made great efforts to sell increased lifetime life, and continued to pay attention to whether there was marginal improvement in this week’s premium data. However, with the recurrence of the epidemic, the consumption capacity of residents is weak, and it will take time for insurance demand to pick up. Asset side: the expectation of interest rate and reserve requirement reduction is still in progress, but under the background of credit expansion, the possibility of significant decline of long-term interest rate is low. In addition, the expected improvement of real estate policy is expected to improve the investment expectations of insurance companies.
Liquidity: the net return of reverse repo last week was 450 billion.
Investment advice
Securities companies participating in public funds or related targets with strong asset management ability include Orient Securities Company Limited(600958) , China stock market news with excellent fund consignment ability and large holdings, and China International Capital Corporation Limited(601995) , with outstanding institutional business ability. Ping An Insurance (Group) Company Of China Ltd(601318) , which is related to the synergy of “Bank + insurance” group.
Risk tips
The covid-19 epidemic worsened, China’s economic pressure increased, and the decline of long-term interest rate exceeded expectations.
