The 5-year LPR was lowered by 15bp, exceeding market expectations. In May, the price of LPR was lowered: the price of one-year LPR was 3.70%, which remained unchanged; The five-year LPR was 4.45%, down 15bp. We believe that the interest rate cut will help stimulate credit demand and help broaden credit. We judge that the follow-up aggregate and structural tools may be developed at the same time, and the promotion path at the aggregate level will follow the LPR reduction, which will drive the deposit interest rate down accordingly, and substantially form the effect of interest rate reduction by reducing the cost of bank liabilities.
Once again, it is emphasized that securities companies are not in line with the economic cycle, but in line with the policy cycle. We believe that when the economic expectation is worse, it is often easy to catalyze the high-level market of securities companies. The reason is that when the downward pressure on the economy increases, it is often easy to introduce positive monetary policy, which affects the denominator of DDM through the decline of risk-free interest rate and drives the improvement of valuation. At present, social finance, social zero and other economic data are weak, and the urgency of the introduction of stimulus policies has risen sharply. In addition, there are frequent favorable policies in the capital market. The continuous expansion of the capital market, the establishment of the market maker system and the launch of the comprehensive registration system are expected to be fully beneficial to securities companies.
Positive policy + loose expectation two-way catalysis, focusing on the securities sector. We judge that the brokerage sector is breeding a beta market of “turning from defense to attack”. At present, the safety margin of valuation of securities companies is high (Pb is in the last 5% valuation range in History), and the defense value is significant; The frequent favorable policies of capital market reform combined with the loose monetary policy are expected to be a major positive for the sector.
Stock selection idea: focus on the two main lines of marginal prosperity improvement and equity investment preference release
The first idea is to improve the marginal prosperity. 1) Since May, the market trading activity has continued to decline, with the average daily stock based turnover of 898.6 billion yuan, down 7.1% from April and 20.8% from the average in 2021. The average balance of two financial institutions in Q2 to today is 1581.5 billion yuan, a year-on-year decrease of – 5.0%; 2) We believe that under the two-way catalysis of favorable policies and loose expectations, the market trading activity is expected to improve and the trading performance of catalytic bonds will pick up; 3) The core targets of this main line are Citic Securities Company Limited(600030) (Q1’s only leading securities firm with positive profit growth; stock based transaction share increased from 4.99% to 6.95% in 20162021; institutional business advantages are significant, benefiting more from policy dividends such as market makers), China stock market news (brokerage business and fund consignment share continue to increase, and alpha advantage is significant).
The second idea is to release the preference of equity investment. 1) Since the beginning of the year, affected by the market shock, the new issuance scale of equity funds has remained depressed. Since the beginning of the year, the new issuance scale of equity funds has been 174.3 billion yuan, a year-on-year increase of – 83.4%; since Q2, the new issuance scale has been 23.6 billion yuan, a year-on-year increase of – 83.5%; 2) We believe that the subsequent easing is expected to promote the improvement of equity investment preference, and the new issuance and management scale of equity funds are expected to grow; 3) The core targets of this main line are Gf Securities Co.Ltd(000776) (e fund Q1 equity fund holds 561.8 billion, ranking first in the industry; GF 403 billion, ranking third in the industry), Orient Securities Company Limited(600958) (huitianfu fund 314.3 billion, ranking sixth in the industry; Dongzheng asset management 170 billion, industry 17).
Investment suggestion: the easing is stronger than expected or will become the strongest catalyst for the market of securities companies. Securities companies should grasp two main lines in stock selection: 1) the core benefit target under the improvement of market prosperity. It is suggested to pay attention to Citic Securities Company Limited(600030) ; China Stock Market News ； 2) For wealth management targets under the release of equity investment preference, it is recommended to pay attention to Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) .
Risk warning: deterioration of external environment; Repeated outbreaks; The economic recovery is less than expected; The operation of the company is not as expected
