Market Review
Last week (4.11-4.15), securities, insurance and diversified finance sectors rose or fell by + 0.0%, - 1.8% and - 3.0% respectively. The Shanghai Composite Index, Shenzhen Composite Index and gem rose or fell by - 1.2%, - 2.6%, - 4.3% respectively, and the Shanghai and Shenzhen 300 fell by 1.0%. The excess returns of securities, insurance and diversified financial sectors relative to Shanghai and Shenzhen 300 were + 1.0%, - 0.8% and - 2.0% respectively. Since the beginning of 2022, securities, insurance and diversified finance sectors have fallen by 18.2%, 5.9% and 11.7% respectively.
Core view
Securities: the central bank cut the reserve requirement by 0.25 basis points on Friday, lower than market expectations. Superimposed on the fact that the epidemic situation in Shanghai is still severe, the disk is expected to be under pressure this week. However, the brokerage sector changed frequently last week. First, the current index is at the bottom of the stage, and sentiment and confidence are expected to pick up; Second, since 2018, the asset quality of securities companies has been continuously improved, the valuation is in a historical position, and there are repair expectations; Third, under the background of wealth management, the performance of some securities businesses is still flexible. Dongcai is dominated by long tail customers, and the trading volume is greatly affected by market sentiment. In addition, Dongcai's fund ownership and subscription volume are leading in the industry. Dongcai is expected to take the lead in benefiting from the expected recovery of the industry in the future.
Insurance: liability side: in Q1, all insurance companies vigorously sold increased lifetime life, but the overall premium did not recover significantly. Nbvm of life insurance is lower than that of health insurance, and NBV of insurance companies is expected to remain under pressure in the first quarter. With the repeated epidemic, the consumption capacity of residents is weak, and it will take time for insurance demand to pick up. Asset side: the RRR reduction is less than expected, and under the background of credit expansion, the possibility of a significant decline in long-term interest rates is low. In addition, the expected improvement of real estate policy is expected to improve the investment expectations of insurance companies.
Liquidity: the central bank made a net withdrawal of 50 billion last week.
Event comments
Comments on the measures for the administration of life insurance sales behavior (Exposure Draft): the new exposure draft cancels the rigid restrictions such as the amount and time of commission payment and the resident mode of bancassurance. On the whole, the terms that have a great impact on the industry have been relaxed or cancelled. The impact on the industry is much lower than the previous version, reflecting the care of regulators for the insurance industry in the downturn. Comments on premium in the first quarter: Life Insurance: at present, the liability side of life insurance is still under pressure, and the sales of lifelong life insurance is not satisfactory. It is expected that the value of new life insurance business in the first quarter is still under pressure. Property insurance: we believe that the impact of the comprehensive reform of auto insurance has gradually dissipated, and the premium is expected to increase steadily in the future.
Investment advice
It is suggested to pay attention to: China stock market news with excellent fund consignment ability and large holding capacity. Related targets: China International Capital Corporation Limited(601995) , with outstanding institutional business capacity, and Ping An Insurance (Group) Company Of China Ltd(601318) , with 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.
