Market Review
Last week (5.16-5.20), securities, insurance and diversified finance sectors rose or fell by + 1.5%, + 0.5% and + 1.3% respectively. The Shanghai Composite Index, Shenzhen Composite Index and gem rose or fell by + 2.02%, + 2.64%, + 2.51% respectively, and the Shanghai and Shenzhen 300 rose by 2.2%. The excess returns of securities, insurance and diversified financial sectors relative to Shanghai and Shenzhen 300 were – 0.7%, – 1.7% and – 0.9% respectively. Since the beginning of 2022, securities, insurance and diversified finance sectors have fallen by 24.9%, 14.0% and 19.0% respectively.
Core view
Securities: favorable policies gradually accumulated: 1) the long-term (5-year) LPR was reduced by 15bp; 2) With the introduction of the public fund management measures and the “16 public offering” policy issued in the early stage, the asset management of securities companies will speed up the application for public offering licenses in the future. At this stage, we reiterate three investment lines: 1) securities companies with certain growth and rapid expansion of business scale in the stage of market recovery; 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; 3) Securities companies that are less affected by self operation and have stable business development.
Insurance: listed insurance companies disclosed premium data in April: affected by the national epidemic, the single month premium of Ping An and Guoshou in April still increased negatively. Liability side: the national epidemic continued from April to may, and the liability side of insurance enterprises continued. Asset side: the market downturn affects the investment income of insurance enterprises and drags down the performance of net profit. The semi annual performance of insurance companies is expected to continue to be under pressure.
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 shares, the strong wealth management business of Orient Securities Company Limited(600958) , the steady self operated business, the steady growth of other businesses of Guolian Securities Co.Ltd(601456) , the synergy of “Bank + insurance” group and the steady investment of Ping An Insurance (Group) Company Of China Ltd(601318) .
Risk tips
The covid-19 epidemic worsened, China’s economic pressure increased, and the decline of long-term interest rate exceeded expectations.
