Brokerage stocks are expected to usher in a second round of long windows

2020/01/03 09:03:10 Source: China Securities Journal 2020/01/03 09:03:10

The downgrade came again. Institutions believe that monetary policy may be loose in 2020 and the reduction of social financing costs will further promote the valuation of capital markets and active trading. In addition, lowering the standard also helps to reduce the financing costs of securities firms, which is very important for securities firms that gradually re-assess their business. The brokerage stocks whose current valuation is still on the low side are expected to usher in a second round of long window.

Market sentiment still has room for fermentation

China Merchants Securities believes that the more than 800 billion yuan of long-term funds released in this comprehensive RRR cut can effectively enhance market confidence and accelerate the introduction of incremental funds into the market. Confidence is the most important basis for the fundamentals of securities firms. Against the background of a reasonable and abundant money supply and the continued development of reform policies, all of the securities firms' self-operated businesses (brokerage, investment banking, credit, asset management) will benefit significantly from capital. The market is active and incremental funds enter the market, and the performance is expected to continue to improve sequentially, gradually matching the short-term valuation improvement.

Anxin Securities believes that this round of RRR cuts is different from previous rounds in that it is a comprehensive RRR cut and its policy effect is more powerful. With reference to the launch of securities stocks in 2014, one of its prerequisites is multiple rounds of central bank cuts. It is expected that monetary policy will be loose in 2020, and the reduction of social financing costs will help improve the profitability of real enterprises, and will further promote the improvement of capital market valuation and active trading. In addition, the RRR cut is also conducive to reducing the financing costs of securities firms, and it is beneficial for securities firms to further expand their operating leverage, thereby improving profitability, which is very important for securities firms that gradually re-assess their business.

Anxin Securities said that the market ’s response to the RRR cut still has room to continue to ferment, corresponding to the increase in the head of brokerage stocks, which is obviously weaker than that of small and medium-sized brokerage stocks. Recently, brokerage stocks are facing multiple positive factors: as the index continues to rise, the market risk appetite has increased; the balance of the two financings has exceeded the trillion yuan mark; the launch of the CSI 300 options tool will also enhance the enthusiasm for participation of quantitative funds and long-term funds . The RRR cut will further repair the market's expectations for economic improvement, and brokerage stocks whose current valuation is still low are expected to usher in a second round of long windows.

Profitability is expected to improve

Analysts generally expect that the profitability of the securities industry is expected to improve. Future interest rate cuts are expected to further activate transactions, which will drive the performance of brokerage brokers and self-employed businesses. Derivatives business is expected to become the main direction for brokerages to increase leverage in 2020 and an important source of profitability; wealth management expects more policy levels Good news came out.

Cinda Securities believes that in the short term, China's economy is in a period of marginal improvement in liquidity and economic marginalization, and the revision of the superimposed capital market top-level design bill has been completed, which will greatly benefit the capital market and increase the profit of the securities industry.

China Merchants Securities believes that in terms of monetary policy, the central bank may continue to steadily guide the interest rate level to a lower level through means such as LPR, with reasonable and abundant liquidity; in terms of industrial policy, the reform policy marked by the amendment of the securities law continues to deepen, and multi-level capital markets Development is expected to continue.

Anxin Securities said that in 2020, the non-banking industry should pay more attention to the acceleration of the transformation and upgrading of the capital market and the improvement of economic quality and people's livelihood. From the perspective of the brokerage business, the investment banking business will become a deterministic increase in 2020, especially entrepreneurship. The relaxation of the board registration system and refinancing requirements may significantly increase the number and scale of SME listings and refinancing.

(Article source: China Securities Journal)

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