Key investment points
The real estate cycle affects the scale of bank credit expansion and asset quality, and banks are highly related to the real estate market. The real estate cycle determines the scale, growth rate and asset quality of bank assets. The start-up of real estate market is basically consistent with the time point of sales recovery, which is divided into three steps: the first step is the implementation of policies, which shows that the signals of wide currency and loose real estate are highly deterministic, and the market expectation is reversed, which generally takes 1-2 quarters; The second step is to stabilize confidence, which is reflected in the stabilization of broad credit, the steady recovery of M1 and the growth rate of residents' medium and long-term loans, which will land in one quarter in the short term and lag behind for 2-3 quarters in the long term; The third step is to cash in the performance, which shows that the sales of real estate enterprises pick up, which is generally synchronized with wide credit.
Since 2008, the correlation between the rise and fall of real estate and banks has been as high as 0.8. It has experienced three rounds of linkage market between real estate and banks, but the correlation has decreased since "real estate is not fried" in 2017.
1) from 2008 to 2009, monetary, real estate and fiscal policies were greatly relaxed, credit was quickly implemented, and the bank real estate market started strongly, lasting for nine months. The real estate rose by 215% and the bank rose by nearly 145%. Societe Generale, Shanghai Pudong Development Corporation and Ping An Bank Co.Ltd(000001) rose the most.
2) from 2012 to 2013, the overall easing intensity was small, and the expectation of real estate easing did not fall. This round of bank real estate market lasted only two months, with banks rising by 51% and real estate rising by 33%, both outperforming the market. Lasting only two months, real estate and banking rose by 33% and 51% respectively, with Minsheng, Ping An and Societe Generale among the top gainers.
3) in 14-15 years, the real estate cycle was strong, but the credit lag was long. In the wide currency stage, bank stocks took the lead, with an increase of 60%, outperforming the market. In the stage of wide credit, funds flowed from the stock market to real estate, and the performance expectations were fulfilled. The real estate rose 41%, outperforming the market, and the bank index rose 13%, slightly underperforming the market. Shanghai Pudong development, China Merchants, Nanjing, Bank Of Ningbo Co.Ltd(002142) led the increase.
Current progress of real estate restoration: 1) policy side: signals are released frequently, and all "ammunition" has not been played yet. The policy toolbox includes reducing reserve requirements and interest rates, dredging wide credit channels, and more cities join the team of deregulation of purchase and loan restrictions. 2) Bank side: financing channels have been gradually restored and M & A loans have been relaxed, but high-quality resources are concentrated in state-owned enterprises, and the risks of private real estate enterprises have not been fully released. 3) Real estate: the growth rate of sales area in some areas has recovered month on month, but the epidemic has been repeated, disrupting the recovery rhythm of real estate "xiaoyangchun", and real estate enterprises, especially private real estate enterprises, are still facing financing pressure.
What's the difference between this round of repair? 1) In terms of real estate, on the one hand, the turning point of the long-term real estate cycle has arrived, the expectation of the overall rise in real estate prices is disintegrating, and residents' purchasing power and leverage ability are overdrawn. 2) The bank intends to gradually reduce its real estate risk exposure, and the proportion of bank loans to real estate has decreased from 29.0% in 2019 to 27.1% in 2021. Although the direction of steady growth remains unchanged, it will prolong the current round of repair cycle.
Which banks will benefit? We are optimistic about the bank market under the logic of steady growth. The main logic is: first, there is room for steady growth. The current repair market is expected to continue in the future and reduce the cost of bank liabilities. Second, the policy adjustment in many places, the real estate is expected to gradually stabilize, and the banks with population inflow and strong regional economic development will benefit. Third, banks dragged down by real estate risk exposure and bad debts are expected to reverse. Follow Postal Savings Bank Of China Co.Ltd(601658) , China Merchants Bank Co.Ltd(600036) , Bank Of Ningbo Co.Ltd(002142) , Bank Of Chengdu Co.Ltd(601838) , Ping An Bank Co.Ltd(000001) , Industrial Bank Co.Ltd(601166) .
Risk tip: steady growth is less than expected, real estate has a hard landing, and the impact of policies is insufficient.
