Qiu Dongrong: Banking Industry Down Bank Shares Upward

In the past 2 months, Qiu Dongrong has been firmly optimistic about the opportunity to underestimate the value of the blue chip sector. It has focused on banking, brokerage and other financial sectors, as well as real estate, pportation and other weight blue chips.

Since the 4 quarter, the HSBC Shanxi trust fund managed by Qiu Dongrong has risen 18.04%, ranking the fifth of all similar funds.

The HSBC Jinxin dual core strategy fund, managed by him, was also sought after by investors.

When asked why the future of the banking industry is promising, Qiu Dongrong gave an unexpected answer: "I am not optimistic about the banking sector."

Why not optimistic about the banking industry? The reason given by Qiu Dongrong is very clear: "in the context of interest rate liberalization and deepening changes in the financial industry, I believe that the profitability of banks will definitely decline in the future, and its ROE (net asset gains) will definitely continue to decline. The current ROE of banks is more than 20%, and the future may decline to below 20% or even lower."

Given the expected decline in profitability, why bank loans and buying heavily? Qiu also gave the same reason: "because the share price of bank shares has been overreflecting pessimistic expectations."

Qiu Dongrong, HSBC Jinxin believes that the main factor that current banks are facing is not the issue of profit growth but the risk of asset quality.

The weakening of macro-economy, especially the systemic risk brought by the decline of real estate prices to the financial system, is the most important factor that restricts the valuation of bank shares.

But recently, management has launched successive directional easing, real estate support policies, local debt correction policies, interest rate cuts, deposit insurance and other policy measures.

On the surface, it seems to be taking the profits of banks back to feed the real economy, but fundamentally speaking, it is "demining" for the real economy.

In the future, as the real economy stabilizes, the risk of banking industry will also be fully released, and the "fetters" that restrict valuation will be broken.

In Qiu Dongrong's words, "in the long run, interest rate cuts are saving bank stocks".

On the basis of sustained policy benefits to release the tail risks of the banking industry, the most important reason for the heavy purchase of bank stocks is Qiu Dong Rong's huge space for upward revision.

"The current price of bank shares has in fact reflected extreme economic expectations.

But in fact, the possibility of such a prediction is not great, and the resulting valuation restoration will have huge room for growth.

According to Qiu Dongrong estimates, the current bank stock price contains a reasonable ROE level is only below 10% digits.

However, the actual ROE level of the banking sector is still up to 20%.

Qiu Dongrong believes that even if the bank's ROE level continues to decline to 10% in the future, there will still be room for room to rise compared with the current stock price.

This is the inherent logic of bank shares taking cattle.

In addition to bank shares, Qiu Dongrong feels that many blue chip chips have similar opportunities: "real estate stocks have similar logic. I am not optimistic about the real estate industry, but I am optimistic about real estate stocks."

Qiu Dongrong believes that although the golden age of the real estate industry has basically ended, the industry as a whole will not have much room for growth in the future. However, the price of real estate stocks is now implying that the real estate market is seriously unsalable and the price of housing is obviously down.

However, with the introduction of a series of policies such as interest rate cuts and real estate support policies, it is unlikely that this extreme risk will emerge.

At present, the quality of real estate leading enterprises and assets is relatively safe, and cash flow is also healthy. Under this background, the valuation repair market triggered by the release of favorable policies is also considerable.

Looking for the next value depression

Although he has made substantial profits in bank shares, Qiu Dongrong believes that any undervalued asset should have a reasonable return process.

While fully enjoying the return of bank shares, Qiu Dongrong has begun to lay out a wider range of new value depressions.

With the help of HSBC's latest "PB-ROE" model (that is, the selection of low PB and high ROE stocks), Qiu Dongrong is more active in trying to find new value depressions outside the financial sector.

He said that with the gradual internationalization of A shares, the A share structure and investment philosophy will also become more mature.

The concept of big market, small cap, value and growth will become more and more blurred in the future market. "Good price good company" will become the only standard.

Therefore, it is the core of the market to explore the opportunity of plate and individual stock from the wrong pricing angle of price and value deviation.