Every time the brand 100 index holds steady at 800 points, the banking sector welcomes the "spring restlessness"?

Every reporter: Liu Mingtao Every editor: Xiao Ruidong

In the first week of 2024, the three major A-share stock indexes closed in the green across the board, and each brand 100 index held the 800-point mark, but despite the weak market adjustment, the high-dividend sectors continued to strengthen, especially the banking sector, which is in a leading position, and the sector is expected to take the lead in the spring market.

The spring market may be delayed

This week, A-shares adjusted again. As of the close of trading on January 5, the Shanghai Composite Index fell 1.54% to close at 2,929.18 points, the Shenzhen Component Index fell 4.29% to close at 9,116.44 points, the ChiNext Index fell 6.12% to close at 1,775.58 points, and the Brand 100 Index fell 1.97% to close at 805 points.

From a macro point of view, the rebound in consumer demand in 2023 and the improvement in the production situation of the service industry have to a certain extent concealed the relative weakness of the manufacturing production and operation environment. Judging from the performance in the fourth quarter of last year, the reading and the magnitude of change in the manufacturing PMI were weaker than the seasonal average. The year-on-year decline in CPI and PPI has not narrowed, which has led to repeated fluctuations in the inventory cycle, and the trend of active replenishment has not been established.

Looking forward to the first quarter of 2024, due to the late Spring Festival this year, the end of the Spring Festival holiday is in late February, and the first batch of new treasury bonds in the second half of last year will only land in mid-to-late December, and the possibility of large-scale construction before the holiday is not high. These factors may lead to a significant improvement in high-frequency and aggregate indicators as late as March, and the short-term economy may continue the trend of last year's fourth quarter.

Due to the weak recovery of the economy and earnings, the marginal improvement of fundamentals will take more time, and the expectation of overseas liquidity easing is repeated, and the domestic easing may be postponed until around the Spring Festival.

At present, the supply and demand problem that the market is most concerned about has not been fundamentally solved, and it may be too early to talk about a complete rebound, but after continuous adjustment, the valuation of some leading stocks has reached a cheap enough position, therefore, the direction of policy key support, industrial trend catalysis and annual report performance may exceed expectations will become an important clue for the follow-up layout.

The banking sector may take the lead in "restlessness"

According to statistics, from 2008 to 2023, the banking sector has outperformed absolute returns 10 times in January, with an increase probability of 63%, ranking first among all industry sectors, and an average increase of 0.7%, also ranking first among all industry sectors.

The banking sector tends to have a better relative income performance in January, mainly because the important economic data from January to February of the previous year are released on a consolidated basis, that is, the eve of the Spring Festival is a window period for economic data and the performance of listed companies. During this period, companies in some industries may take the lead in making valuation switches if they have significant operational information disclosures. For the banking sector, the financial data in January can be used as a reference, and the banking system has always had a "good start" practice at the beginning of the year, and the certainty of the sector may be relatively stronger.

Second, the high-level meeting at the end of last year summarized the economy of the current year and deployed the economic work arrangements for the following year, and the market has expectations for the continuous introduction of the "stable growth" policy. As the economic data at the beginning of the following year is in a window period, the economic upward logic is usually difficult to falsify, or form a certain boost to the banking sector. Third, as the Spring Festival holiday approaches, investors may have concerns about "holding stocks for the holiday", and may prefer the banking sector with relatively stronger certainty and relatively stable stock price fluctuations in the short term.

Judging from a number of indicators since the fourth quarter of 2023, aggregate demand is still weak. From the financial perspective, under the background of the policy emphasizing the "balanced allocation" of credit resources, "revitalizing the stock" and "improving efficiency", it is expected that it will be difficult for the banking system to have obvious credit impulses, but it will help improve the investment structure and stabilize the level of new interest rates.

Everbright Securities analysis pointed out that if the banking sector wants to get out of absolute return performance in January, it needs to "stabilize growth" policy to transform "weak expectations" into "strong expectations". If the macro economy still presents a combination of "weak expectations and weak reality", the banking sector as a whole will tend to play a defensive role, and relative returns can be expected in terms of returns, while absolute returns will be differentiated among different institutions, and large state-owned banks will outperform absolute returns at the same time, and the probability of relative returns will be higher. Based on this, it is recommended to focus on the market risk aversion in January, and the steady performance of large state-owned banks under the support of "China Special Valuation".

Bank stocks have a clear valuation advantage

Judging from the performance of the constituent stocks of the Brand 100 Index this week, the high dividend and banking sectors were the strongest, with China CITIC Bank rising 7.18% for the week, and Bank of China, Bank of Communications, China Everbright Bank and Postal Savings Bank also rising more than 2% for the week.

According to the data, as the first A+H listed joint-stock bank after the five major banks, China CITIC Bank's corporate advantages are reflected in both the asset side and the liability side, and in recent years, it has attached great importance to the refined operation of customers - the deposit and loan contributions of strategic customers are relatively high, and government agencies and small and micro customers focus on deposits and loans respectively. Launched in 2023, the "Tian Yuan Treasury" is the first treasury management system independently developed by a bank in the industry, helping to build a first-class financial system for public and central enterprise customers, which is expected to feed back the deposit and loan business and accumulate low-cost deposits.

As a result, China CITIC Bank has a solid corporate customer base, and its retail business has entered a period of accelerated transformation of potential energy, with significant improvement in asset quality and the empowerment of a fully licensed group, which is expected to open up incremental space for various businesses and large room for valuation repair.

Bank of China is the bank with the longest continuous operation time in mainland China, and based on the advantages of traditional foreign exchange and foreign trade, Bank of China has continuously improved its globalization and comprehensive layout.

As of the first half of 2023, Bank of China has a total of 532 overseas branches, covering 63 countries and regions, ranking first in the industry in terms of the number of overseas institutions, the proportion of personnel and the breadth of regional coverage. In terms of regional layout, with BOCHK as the core and linking the ASEAN Bay Area, the in-depth promotion of the "Belt and Road" strategy has opened up space for overseas business expansion. The group has many subsidiaries, and all kinds of business licenses are the most complete in the industry, and the advantages of comprehensive financial services are significant. The company also owns Bank of China Fullton, a leading village and township banking group in mainland China, and has great prospects for the development of inclusive finance. Bank of China accelerated its digital transformation, steadily increased its investment in technology, improved operational efficiency, and strengthened its customer base.

The Postal Savings Bank is a large state-owned bank deeply rooted in the county, and has excellent retail resource endowment. Adhering to the retail banking strategy, the asset structure has been improved, the wealth management upgrade has achieved remarkable results, the asset quality is excellent, and the provisions are relatively sufficient. The company's business is rooted in individuals and small and micro enterprises, with outstanding customer advantages, interest margin performance and asset quality continue to outperform the industry, and financial performance continues to verify the fundamentals, making it a growing variety among large banks.

National Business Daily