Since the beginning of 2022, the banking sector, which has been depressed for a long time, has bucked the trend for many days and attracted close attention from the market. After the ups and downs of 2021, the investment value of bank stocks that have been in the valuation depression appears again.
This optimism can be seen in the flow of funds. In the first week of the stock market in the beginning of the year, the net inflow of northward funds into the A-share banking sector reached 3.96 billion yuan, ranking first in 31 industries. The bank index also ranked fourth in A-share industries with an increase of 2.9%. Similarly, the H-share banking sector also ranked fourth. In addition, due to the defensive nature of the banking sector, some public funds were also adding positions in bank shares in January.
For some time to come, loose expectations, good fundamentals and undervalued three main factors are expected to drive the banking sector to maintain optimistic performance.
Loose macro policies may be an important prerequisite for catalyzing the rise of bank stocks. Last December, the central bank cut reserve requirements and interest rates continuously and increased open market operation in order to maintain a more abundant liquidity environment. Under the policy tone of "stability first", the market expectation of the continuous and steady recovery of social finance growth is very clear. Driven by the credit demand of real estate, infrastructure, green and inclusive small and micro enterprises, the bank's business environment is expected to continue to be improved.
The excellent performance of the first batch of A-share bank performance express has given a "booster" to the banking sector. In recent days, Bank Of Chengdu Co.Ltd(601838) , Industrial Bank Co.Ltd(601166) , Bank Of Jiangsu Co.Ltd(600919) and other performance forecasts disclosed successively show that the net profit of several listed banks has increased by more than 20%, of which the net profit of Bank Of Jiangsu Co.Ltd(600919) , Industrial Bank Co.Ltd(601166) has increased by 30.7% and 24% respectively year-on-year.
From the asset side, the pressure on the quality of real estate loan assets previously worried by the market due to real estate risks has been mitigated with the gradual recovery of real estate financing demand. According to the recent data of the CBRC, as of the end of November last year, the non-performing loan ratio of the banking industry was 1.89%, down 0.04 percentage points from the beginning of the year. In fact, in recent years, listed banks have carried out large-scale recognition and disposal of non-performing loans, reducing the potential risk of asset quality and making more adequate provisions. It can be said that the greatest pressure on bank asset quality has passed.
At present, in the recent volatile market environment, bank stocks with defensive "cabbage price" have become one of the important sectors of capital inflow. This is not only because bank stocks have been in a valuation depression for a long time, but also related to the market inertia of the "spring market" of bank stocks to a certain extent. Bank stocks have performed well in most years in the first quarter of the past decade.
From the perspective of long-term holding, due to the stable dividend and dividend rate of bank shares, there are more and more voices on the market discussing that "it is better to be a shareholder than a bank" recently. Can bank stocks "turn the tide around"? We may as well wait and see.
