Lu Yuren-Hitchhiking with senior executives of Neiyin｜Financial High Tea | Headline Daily

2023-05-08 16:00:00

​U.S. stocks closed higher last week, and the mainland A-shares performed well, causing the Hang Seng Index to rise by more than 200 points, but the market topic is not how much the market will rise, but the strength of the mainland banking stocks, especially the rise of the mainland A-shares. ” The grand event” made investors’ eyes shine.
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The catalyst for this round of upswing in banking stocks, as Lu Yuren has previously announced, is that the interest rate spreads of mainland banks narrowed in the first quarter, but the competent authorities intend to reverse the situation. This inducement has touched the performance of the domestic banking stocks in recent transactions, and the A shares even experienced a sharp rise yesterday. The current topic of mainland analysts is the restoration of the valuation of mainland banks, as well as the movements of executives following their “unwinding”.
Bank of China’s A-shares soared and H-shares were relatively reserved

Mainland analysts are now saying that the low-interest rate loan behavior has been canceled following window guidance, which has a relatively positive catalyst for bank interest margins and is a short-term benefit. In addition, the Politburo meeting at the end of April did not see significant policy tightening, which is another short-term positive for the banking industry. In the medium term, there may be an inflection point in performance.

According to the analysis, in a single quarter, the revenue growth rate in the first quarter of this year was slightly higher than that in the fourth quarter of last year. It is expected that the growth rate of bank income in the second, third and fourth quarters of this year will improve quarter by quarter, especially for small and medium-sized banks. The reason for the inflection point is that the LPR fell in the first half of last year. On January 1 this year, the bank re-priced the loan interest rate, and the interest rate fell. This is a known negative and the market has digested it, so bank stocks will recover. From the perspective of valuation, following the previous correction of the banking sector, the current PB of the banking sector is less than 0.6 times, which is far lower than the average level of 0.86 times in 2021, and there is room for repair. At the same time, the banking sector has the characteristics of “low valuation, high dividends”. In the past 10 years, the average dividend rate has stabilized at around 4.3%, ranking first among all sectors.

Another interesting phenomenon they have noticed is that executives of domestic banks have recently increased their shareholdings. Liu Jin, President of Bank of China, said at the 2022 results conference that Bank of China’s performance in H-shares and A-shares in the past two years is not bad among bank stocks, and it has outperformed major market indexes. The two-year total shareholder return rate for A shares considering dividend distribution exceeds 13%, and for H shares exceeds 26%, providing shareholders with better investment returns. He also personally invested in a large bank stock, regarding tens of thousands of shares. I bought it more than ten years ago, and now it is often lower than the purchase price more than ten years ago.
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Similar situations have occurred in other domestic banks. Since the second half of 2022, banks including Sunong Bank, Shanghai Rural Commercial Bank, and Bank of Changsha have released figures on the purchases of shares by directors and executives. Since May, the stock price has risen. Some bank executives have already begun to unravel and realize profits. However, many of these bankers have stated that the main body of the shareholding increase voluntarily promises not to reduce the newly increased holdings during the implementation period of the increase plan and within two years from the date of completion of the increase plan. Most of the bankers are stable players, and their investments are counted. Judging from their movements, if investors who have already boarded the car can continue to sit or invest in short-term speculation and long-term attacks, those who have not boarded the car can still think regarding it when they see a drop. .​​​​

Inner banking stocks were shining brightly, driving the entire Chinese group to become an eye-catching group. After the Hang Seng Index opened higher, it rose by as much as 272 points to see 20,321 points, and closed at 20,297 points, up 247 points. Bank of China (3988) A-shares rose and suspended trading. Hong Kong was much more subtle, up nearly 5% to close at 3.42 yuan; Agricultural Bank of China (1288) rose 3% to close at 3.27 yuan; China Construction Bank (939) rose 4% to close at 5.63 yuan.
Three barrels of oil are shining brightly in Chinese characters

Stocks with “Chinese characters” are popular, especially high-dividend stocks. Among them, “three barrels of oil” have risen in line with international oil prices. CNOOC (883) rebounded 6% to close at 13.06 yuan; PetroChina (857) rose 4% to close at 5.48 yuan; Sinopec (386) rose 6% to close at HK$5.38, being the best performing blue chip of the day.
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Auto stocks in other sectors were on the rise. Xiaopeng (9868) rose 4% to close at 41.4 yuan; Ideal (2015) rose 5% to close at 96.7 yuan; the Vietnamese government stated that BYD (1211) plans to produce electric vehicles locally and is expected to receive the government support. A BYD spokesperson confirmed the plan to produce electric vehicles in Vietnam, but did not provide any investment details. BYD raised 2% to close at 240 yuan.
Jin Riku

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