Non bank sector investment story
Interpretation of important events this week:
This week, the overall performance of the market declined. The CSI 300 index fell 2%, of which the brokerage sector fell 3.02% and the insurance sector fell 3.52%. The overall performance was weaker than the market. This week, the stock trading volume of the two cities was 1.2 trillion, down 12.51% month on month. The balance of the two financial institutions remained at 1.81 trillion, basically the same as last weekend. This week, CITIC, Zheshang, Zhongyuan and Guolian released the 2021 performance express to achieve high growth. In addition, Citic Securities Company Limited(600030) allotment was officially implemented. For the first quarter, investors are advised to focus on Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) and China stock market news with greater flexibility in wealth management. For the insurance sector, insurance companies are under great pressure to make a good start. It is expected that the marginal improvement of asset side fundamentals will become the driving force to promote the recovery of insurance companies’ share prices in the second quarter of next year. The relaxation of financing of real estate companies is expected to promote the improvement of credit risk concerns. It is suggested to lay out high-quality leading insurance companies with historically low valuation.
Sub segment view:
(1) brokerage sector: this week, the CSRC launched the reform of dealing with goods and banks, which, on the one hand, improved the overall risk prevention and control ability of the market, attracted foreign funds to enter the Chinese market, and on the other hand, improved the use efficiency of market funds. In the follow-up, we continued to be optimistic about the market of the securities sector at the beginning of the year, with relatively loose liquidity and favorable policies, high growth and strong certainty of the performance of listed securities companies, and the performance forecast drove the sentiment of the sector. It is recommended to pay attention to wealth management main line securities companies, such as Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) , and China stock market news.
(2) insurance sector: the marginal changes in insurance fundamentals in the short-term market focus on the mitigation of the real estate financing environment, driving the improvement of the asset side fundamentals of insurance enterprises. Considering that the valuation of the insurance sector is at a low level and the fundamentals are expected to usher in marginal improvement, it is suggested to lay out the leading insurance companies at a low level. With regard to the subject matter, it is suggested to focus on AIA, which benefits from accelerating the expansion of the Chinese market and the dividends of insurance enterprises opening to the outside world.
(3) diversified financial sector: relaxing the investment scope restrictions of insurance funds on venture capital institutions will help insurance funds increase the investment scale of venture capital institutions and significantly improve the development of venture capital industry. It is suggested to focus on Lenovo holdings, which is backed by the industrial resources of the Chinese Academy of Sciences and has high-quality investment institutions such as Junlian and Hony.
Brokerage sector view
This week, the weekly decline of brokerage stocks reached 3.0%. The top three brokerage stocks with stock price increase were: Central China Securities Co.Ltd(601375) (+ 2.27%), China International Capital Corporation Limited(601995) (+ 0.11%) and Chinalin Securities Co.Ltd(002945) (- 0.32%). On Sunday, the average share based trading volume was 1153.9 billion yuan, down 12.5% month on month; The balance of margin trading was 1.81 trillion yuan, unchanged month on month. This week, several listed securities companies released performance express reports. CITIC, Guoyuan, Zheshang, Zhongyuan and Guolian realized net profits attributable to parent companies of 22.98 billion yuan, 18.7 billion yuan, 4.9-6.5 billion yuan, 4.7 billion yuan and 300 million yuan respectively, with a year-on-year increase of + 54.2%, 36.5%, 30% – 40%, 394% and 51.3% respectively. Citic Securities Company Limited(600030) performance exceeded market expectations. At the same time, the company plans to implement the share allotment plan on January 19, Therefore, it will bring some disturbance to the trend of the company and securities companies. We believe that after the company’s 28 billion allotment and fund-raising are in place, it is expected to further open the space for institutional business development, and the impact on valuation will gradually weaken. We are still optimistic about the market of securities companies at the beginning of the year. On the one hand, under the background of deepening the reform of the capital market, active policies have been implemented one after another, and there are still expectations for the follow-up. On the other hand, the central bank’s monetary policy is positive, and it is expected to maintain loose liquidity in the first quarter. In addition, the performance of the securities business in 2021 is high and the certainty is strong. It is still expected that the securities companies with performance growth of more than 50% will release performance pre increase notice in the future, which will drive the sentiment of the sector. From the perspective of stock selection, we recommend wealth management main line securities companies such as Gf Securities Co.Ltd(000776) , Orient Securities Company Limited(600958) and China stock market news, focusing on Citic Securities Company Limited(600030) and China International Capital Corporation Limited(601995) H.
The CSRC has started the reform of dealing with goods and banks and reduced the provisions. This week, the CSRC officially launched the DVP reform, soliciting opinions from the market on the proposed revised Measures for the administration of securities registration and settlement, and CSDCC simultaneously solicited opinions on the settlement rules and the measures for the administration of settlement reserves. DVP is a basic system widely used in the international market to ensure the full settlement of money and securities after securities transactions are completed. This reform mainly aims to improve the institutional self operation and custody settlement system, establish the relationship between securities settlement and capital settlement, and clarify the disposal arrangements for breach of contract. This reform does not involve brokerage and margin trading business, has no impact on individual and institutional investors, and maintains the existing transaction settlement system and habits of investors. At the same time, CSDCC will simultaneously implement the work of reducing the settlement provision, so as to reduce the minimum provision proportion of stock business from 18% to 15%. The reform of the cargo bank counter balance and the supporting reduction of the calculation and collection proportion of the minimum settlement provision, on the one hand, strengthened the security of the settlement system, improved the overall risk prevention and control ability of the market, further attracted overseas funds to enter the Chinese market, on the other hand, reduced the occupation of funds in the whole market and improved the use efficiency of market funds.
Insurance Sector View
This week, the insurance sector index fell 3.52%, including New China Life Insurance Company Ltd(601336) (- 3.21%) / Ping An Insurance (Group) Company Of China Ltd(601318) (- 3.48%) / China Pacific Insurance (Group) Co.Ltd(601601) (+ 2.95%) / China Life Insurance Company Limited(601628) (- 5.04%). Affected by industry regulation and the loss of agent team and other factors, the premium data of listed insurance companies show a weak trend as a whole. Considering the impact of the base, stricter supervision and manpower reduction in the same period last year, the pressure for a good start in 2022 is not small. We believe that the focus of marginal changes in insurance fundamentals in the short-term market lies in the resolution of asset side risks. The easing of the real estate financing environment has driven the improvement of the asset side fundamentals of insurance enterprises. Considering that the valuation of the insurance sector is at a low level and the fundamentals are expected to usher in marginal improvement, it is suggested to lay out the leading insurance companies at a low level. With regard to the subject matter, it is suggested to focus on AIA, which benefits from accelerating the expansion of the Chinese market and the dividends of insurance enterprises opening to the outside world.
Life insurance is still under pressure, and property insurance has improved significantly year-on-year. This week, Guoshou, Ping An, Xinhua and PICC released the premium data in December, and the accumulated premium was 6200, 7603, 1634 and 5810, 1.1%, – 4.6%, 2.5% and 3.7% year-on-year. Among them, in terms of life insurance, the accumulated premiums of Guoshou, Ping An, Xinhua and PICC were 1.2%, – 4.1%, 2.5% and + 0.7% year-on-year. In a single month in December, Xinhua increased by 20% year-on-year, and Ping An, Guoshou and PICC decreased by 5%, 0.4% and 23% respectively. The overall new order sales are still relatively weak. In terms of property insurance, the cumulative premiums of Ping An and PICC reached – 5.3% and 3.8%, of which + 14% and 30% respectively year-on-year in December, mainly benefiting from the impact of the low base of comprehensive reform of vehicles last year and the high growth of non vehicle insurance such as Jianyi insurance. From the overall December data, the overall pressure on life insurance continues, the sales of guaranteed products still face certain difficulties, and the transformation of agents and industry is difficult to achieve overnight. In terms of property insurance, the year-on-year growth rate of premium has increased significantly, and the comprehensive reform of automobile has significantly increased the operating pressure on small and medium-sized insurance enterprises. Although the industry leaders also face the rise of the overall comprehensive cost rate, the market share is expected to rise in the medium and long term, thanks to the acceleration of the industry reshuffle.
Pluralistic financial view
This week, the diversified sector fell 1.21%, the trust sector fell 2.40%, and the venture capital index fell 0.65%. Recently, the China Banking and Insurance Regulatory Commission issued document No. 47, relaxing the restrictions on the investment scope of insurance funds in venture capital institutions, which will help insurance funds increase the investment scale of venture capital institutions and significantly improve the development of venture capital industry. It is suggested to focus on Lenovo holdings, which is backed by the industrial resources of the Chinese Academy of Sciences and has high-quality investment institutions such as Junlian and Hony.
The introduction of new regulations of the monetary fund will prevent risks and benefit small and medium-sized funds. This week, the CSRC issued the Interim Provisions on the supervision of important money market funds, focusing on preventing the market risks of money funds, enhancing the anti risk ability and strengthening the supervision and management mechanism. The new regulations clearly target important money market funds, including but not limited to a single fund that meets the conditions that the net asset scale is greater than 200 billion yuan or the number of investors is greater than 50 million for 20 consecutive trading days. By the end of the third quarter of 2021, there were 18 fund companies, and the total scale of money market fund management exceeded 200 billion yuan. The new regulations restrict major monetary funds in terms of operation and investment philosophy, investment proportion, trading behavior, scale control, application and redemption management, sales behavior, risk reserve provision, etc. Among them, the investment object, remaining period and leverage ratio are clearly limited, such as cash, treasury bonds, central bank bills, policy financial bonds and other assets shall not be less than 20%, and the average remaining period of the investment portfolio shall not exceed 90 days; The total assets of the fund shall not exceed 110% of the net assets of the fund. In addition, for more than 500 billion yuan for more than 20 consecutive trading days, two requirements shall be met within three months: first, the average remaining period of the portfolio shall not exceed 60 days; Second, under normal market conditions, bond repurchase transactions shall not be carried out. We believe that the introduction of the new regulations will affect the pattern of monetary funds to a certain extent. Large monetary funds are faced with leverage ratio restrictions, duration restrictions, etc., the fund yield may be affected, and the management difficulties and requirements of large monetary funds have been significantly improved. However, from another perspective, the new regulations are also good for the prevention and resolution of the overall market risk of the monetary fund, avoiding the fund cashing pressure in the extreme market environment, and also good for small and medium-sized monetary funds to seize a certain market share.
Risk tips
Epidemic prevention and control is less than expected / economic recovery is less than expected / risk of policy change
