Core view
The draft of the financial stability law was released, and more details of the financial stability guarantee fund were disclosed for the first time. This week, the people’s Bank of China released the draft of the financial stability Law: 1) the long-term legal system “escort” to prevent and resolve financial risks. 2) Refine the responsibilities of the financial commission of the State Council and other entities. 3) A variety of financial risk disposal tools were added. 4) Disclose more details on the establishment of the financial stability guarantee fund. In the government work report of the two sessions this year, the establishment of a financial stability guarantee fund is proposed for the first time, and relevant work is being studied and promoted. The financial stability guarantee fund is used for the disposal of major risks with systemic hidden dangers, and the deposit insurance and industry guarantee funds that play the role of routine risk disposal are essential parts of China’s financial safety net. They are taken from the market and used in the market. Different industries and different subjects are distinguished and differentiated charges are implemented to balance risks, benefits and responsibilities and avoid losses to the interests of the state and taxpayers.
The Congress of the association of listed companies delivered a huge amount of information, focusing on the expansion of the standard of Shanghai Shenzhen Hong Kong stock connect, cross-border audit and supervision cooperation of China concept shares and other core contents. This week, the third member congress of China Association of listed companies delivered a huge amount of information to the market. The key contents include: 1) the number of investors in China’s securities market has exceeded the 200 million mark, and the proportion of domestic professional institutional investors and foreign investors in circulating shares has increased from 17.6% three years ago to 24.3%; 2) Pay close attention to the study and launch of a new round of independent opening-up and pragmatic measures, steadily expand the scope of the Shanghai Shenzhen Hong Kong stock connect, promote the expansion and optimization of the Shanghai London Stock connect mechanism, and steadily expand the two-way opening of commodity and financial futures markets; 3) Accelerate the implementation of new regulations on the supervision of overseas issuance and listing of enterprises, maintain smooth channels for overseas listing, promote the achievements of China US audit and supervision cooperation, and build a predictable international regulatory environment for the high-level opening of the capital market. Whether it is the expansion of Shanghai Shenzhen Hong Kong stock connect or the cross-border audit and supervision cooperation of China concept shares, it is a key measure for China’s high-quality opening-up in the field of capital market. Its subsequent successful implementation will be a major immediate benefit for the release of relevant targets. It is suggested to continue to focus on it.
The annual report of insurance was closed, the transformation of life insurance was deepened, and the logic of increasing the quantity and quality of property insurance was reiterated. After the disclosure of the 2021 annual report of listed insurance companies, the investment side has driven the profit growth, and the operating profit performance has remained stable. However, the reduction of the contribution of new business value, the weakening of the pulling effect of expected return, the negative deviation between operating experience and investment experience and other factors have weakened the momentum of embedded value growth, and the growth rate of some insurance companies has fallen to about 5%. The new business value of life insurance continued to grow negatively, mainly due to the synchronous pressure of new orders and value rate. In terms of total value, the new business value has returned to the level before 2015. Agents fell by 30% in the whole year. We believe that the focus in the future is to balance customer demand and agent income, so as to improve production capacity and retention rate. The growth rate of auto insurance has declined as a whole, but the marginal improvement has been significant since the fourth quarter. We expect to maintain double-digit scale growth this year and have entered an upward channel of both quantity and quality. On the investment side, the total return on investment remained stable, and the downward interest rate pushed the net return on investment down.
Investment proposal and investment object
In terms of securities companies, favorable capital market policies and institutional innovation are still the main theme of the current sector, maintaining a positive rating. In the difficult times of the market, we should stick to the clear and clear leader of undervalued value, and still advocate the main line of derivatives. We recommend Citic Securities Company Limited(600030) ( Citic Securities Company Limited(600030) , overweight), Huatai Securities Co.Ltd(601688) ( Huatai Securities Co.Ltd(601688) , overweight). We suggest paying attention to China International Capital Corporation Limited(601995) (03908, Unrated).
In terms of diversified finance, A-Shares recommend leading high-altitude operation platform lessee Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) ( Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) , buy); Hong Kong stocks recommend Far East Hongxin, the leader of financial leasing (03360, buy). In terms of China concept stocks, although the reversal of the market has not yet come, the policy expectation has improved significantly. Under the repeated market, we can bargain hunting and build positions to gain short-term flexibility. It is suggested to pay attention to futu Holdings (futu. O, buy) and tiger securities (TIGR. O, buy).
In terms of insurance, the transformation of life insurance liabilities is still advancing. Although the improvement of agent production capacity has achieved initial results, there are still negative expectations for the sharp decline of scale. We believe that we should continue to pay attention to the production capacity climbing under the stable scale and the demand release after the activation of security awareness; The logic of both quantity and quality of auto insurance is solid, the growth momentum of non auto insurance is strong and the space is broad, and the opportunity of property insurance allocation is reiterated; There is not much pessimistic expectation on the investment side. Maintain the positive rating of the industry, and follow-up suggestions focus on China Property Insurance (02328, not rated), Ping An Insurance (Group) Company Of China Ltd(601318) ( Ping An Insurance (Group) Company Of China Ltd(601318) , buy), AIA (01299, not rated).
Risk tips
The suppression of systemic risk on the performance and valuation of securities business; Stricter supervision than expected;
The long-term interest rate is lower than expected; Related policy risks in diversified financial field.
