Market Review
Last week (4.18-4.22), securities, insurance and diversified finance sectors rose or fell by – 5.3%, – 3.5% and – 3.7% respectively. The Shanghai Composite Index, Shenzhen Composite Index and gem rose or fell by – 3.87%, – 5.12%, – 6.66% respectively, and the Shanghai and Shenzhen 300 fell by 4.2%. The excess returns of securities, insurance and diversified financial sectors relative to Shanghai and Shenzhen 300 were – 3.8%, + 9.6% and 3.8% respectively. Since the beginning of 2022, securities, insurance and diversified finance sectors have fallen by 22.6%, 9.1% and 15.0% respectively.
Core view
Securities: Dongcai released its first quarterly report last Friday. Under the low expectation, the brokerage business and two financing business performed well, driving the revenue by + 10.61% year-on-year; The net profit attributable to the parent company was affected by the sluggish overall market performance and the high year-on-year increase in sales expenses, with a year-on-year increase of + 13.6%. In the first quarter, due to the decline of the overall market and the downturn of fund consignment business, the self operated business of securities companies and the consignment business of financial products may affect the performance of the first quarter report of the industry. At this stage, we should pay attention to two investment lines: 1) securities companies with certain growth and rapid expansion of business scale in the stage of market recovery; And 2) securities companies with low valuation, strong wealth management business and high performance flexibility after the implementation of bad news such as share allotment and first quarter report.
Insurance: liability side: the performance of the liability side was lower than expected in March, and the superimposed product structure changed from serious illness insurance to increased lifetime life insurance. In the first quarter, the new single premium of insurance enterprises and NBV are expected to be under pressure. Asset side: the market downturn affects the investment income of insurance enterprises, which is expected to drag down the performance of net profit. On Friday, New China Life Insurance Company Ltd(601336) released the forecast of the first quarterly report. It is expected that the net profit attributable to the parent company will decrease by 70% – 80% year-on-year, raising the market’s concern about the investment side of insurance enterprises.
Liquidity: the central bank returned 10 billion yuan last week.
Investment advice
It is suggested to pay attention to: China stock market news, which still has good performance and highlights its scarcity and uniqueness when the overall performance of the industry is under pressure. Related targets: the issuance of rights issue boots has been implemented. China Industrial Securities Co.Ltd(601377) .
Risk tips
The covid-19 epidemic worsened, China’s economic pressure increased, and the decline of long-term interest rate exceeded expectations.
