Southern Responsibility Investment Action Released "China Securities Industry ESG Report": Which Is Strong In Financial War Epidemic?

Researcher Yang Ping and Wang Yuanyuan

Danger is the best test of strength.

At the zero point of April 8th, Wuhan was officially released and became a landmark event in China to fight against the epidemic.

Looking back on the "war epidemic" over the past three months, the financial industry represented by the securities companies has written a thick and colorful image for stabilizing the financial infrastructure construction and serving the real economy.

On the one hand, data is an important window to study the social responsibility input of various brokerages; on the other hand, it is also a consideration of brokers' ability to demonstrate their coping ability in a sudden market situation.

Nanzhi think tank and twenty-first Century economic report Southern responsibility investment action research team studied the "epidemic prevention deployment" of major brokerages during the epidemic period, the physical resistance behavior of the securities companies, the exhibition industry related to the epidemic situation, the extreme economic events and the risk of the securities market, and the measures to stabilize the market during the epidemic.

? ? ? Based on the above four indicators, in the three months of the epidemic cycle, 421 brokerages in Hubei province were forced to temporarily shut down, and the major brokerages were transferred to the online exhibition industry. The investment banking team's on-the-spot investigation was suspended, but many brokerages continued to carry out equity financing, mergers and acquisitions and other business through the preparation and online interviews, verification, and so on, helping the SFC "cloud". "Audit"; materials and funds are scarce; a large number of securities companies help enterprises to carry out epidemic prevention and control debt or asset backed securities, and serve the real economy "war epidemic".

On the whole, as the market weakened, the two financial and brokerage businesses declined significantly, and the 65 brokerages who disclosed the monthly report achieved 73 billion 104 million yuan in operation in 1-3 months, down 1.84% from the same period last year, and realized net profit of 31 billion 34 million yuan, up -7.75%.

The Matthew effect is obvious in the industry, and the ability of large brokerages to cope with extreme economic events is obviously stronger than that of small and medium brokerages. CITIC, Huatai, China Merchants and other leading business performance continued to grow steadily in the first quarter.

With the stabilization of domestic epidemic situation and the support of various epidemic prevention policies and the "green channel", the investment banking business of equity refinancing and bond underwriting of listed securities companies began to expand in March. Since the issuance of the first anti epidemic debt in February 5th, 49 brokerages have invested in the issuance and underwriting of the epidemic prevention debt, and the total issuance scale is as high as 185 billion 186 million yuan. In February 2020 -4 10, there are still 116 listed companies to complete equity financing, and the amount of financing is as high as 254 billion 65 million yuan.

The beginning of the war: the heat of donation is high.

In the early days of the war, the real estate industry had the highest enthusiasm for "epidemic prevention", and most of the coupons were involved in donations, donations and so on. According to incomplete statistics, as of February 19, 2020, a total of 89 member associations of securities industry associations (including subsidiaries, shareholder units, etc.) had donated more than 504 million yuan of donated funds and scarce materials.

Attached chart: summary of donation to fight against epidemic materials in the securities industry (TOP21)

The research team also found that many large brokerages (including shareholders and subsidiaries), in addition to participating in cash and in kind donations, also took many "invisible subsidies", such as setting up foundations, setting up special funds and exempting some enterprises' rents and supervising expenses, which benefited people's livelihood.

The four typical state-level poverty-stricken counties such as Sichuan Puge, Anhui Qianshan, Jiangxi Ji'an and Yunnan Malipo, which are typical counterparts such as Guotai Junan, carry out "growth worry free". Public health supplementary insurance has added subsidies for new pneumonia; Everbright Securities's light certificate leasing will slow down or reduce related rents and fees for enterprises carrying out epidemic prevention and control related equipment leasing business; Guoxin Securities has announced the removal of more than 130 yuan rent from Yiwu tenants;

Stock market volatility: information management plan

The first day after the opening of the session, 1000 shares were down, and market sentiment was greatly affected. In order to prevent market fluctuations and maintain stable operation of A shares, the CSR think tank and twenty-first Century economic report corporate social responsibility research team found that some brokerages eased market pressure by actively subscribing their information management products and stock pledge exhibition period, and this behavior is also a reflection of social responsibility.

? ? ? Among them, Guotai Junan Securities, Xingye securities, Orient Securities and GF Securities four securities companies, Zi Guanzi announced that their products were allocated by their own funds, with a total investment of not less than 470 million yuan; Guotai Junan's stock pledge agreement expired during the epidemic prevention and control. Customers who applied for renewal due to difficulties in payment, such as customers in Hubei area, could apply for extension for 6 months, by securities companies. To assist in the extension of the transaction, for example, customers from other regions may negotiate with the securities company for a period of 3 to 6 months.

However, as a whole, there are many securities companies, such as Guotai Junan, who give certain buffering time to stock pledge business. But with the turbulence of stock market, the risk of pledge still brings crisis to the operation of major brokerages.

The research team found that between 2019 and April 10, 2020, the 106 brokerages and their information management companies altogether carried out 3531 unsecured stock pledge transactions. The total market value of the total shares was 727 billion 75 million yuan, and the total market capitalization of these stocks was 763 billion 101 million yuan as of April 10th. Among them, 400 enterprises suspected to be liquidated, the total market value of suspected open positions was 161 billion 609 million yuan, and the highest total value of suspected liquidation was CITIC Securities, totaling 40 billion 221 million yuan, 23 of which were suspected to be liquidated.

Attached chart: stock pledge trading statistics from 2019 to present (Statistics of transactions by quality pledge TOP20)

The research team believes that since 2018, a number of securities companies have taken the initiative to adjust the position of stock pledge repurchase business, take measures to carry out incremental business prudently, and the stock size of stock pledge business has continued to decline. The risk of stock pledge of securities companies still needs to be valued, especially in the face of such emergencies.

"Epidemic period" resumed: forced brokerage "online exhibition industry"

The so-called "raising soldiers for thousands of days to employ soldiers for a while", before vigorously raising financial technology business brokerage, wait until the day of display.

Affected by the outbreak of the new crown pneumonia, 421 brokerage firms in Hubei province have been temporarily closed since the A shares opened after the Spring Festival.

At the same time, during the epidemic period, the major brokerages basically resumed their jobs on schedule, and the online exhibition activities began to maintain the stability of the financial market.

Since February 3rd, dozens of business contents such as account business, permission class business, product class business and security class business can be handled online. For example, through upgrading and optimizing the PC client and mobile phone App, it provides off-site trading; 7 x 24 hours nationwide customer service telephone, online customer manager service phone, to ensure the smooth flow of customer consultation and communication channels; the introduction of online smart customer service, timely response to customer needs; through the App, WeChat public number and other official channels to strengthen the online business process announcement.

Take Changjiang Securities as an example. During the epidemic period, the company shifted its focus to the online business. Data show that its Yangtze River e APP3 month living data increased by 70% over the same period. Online new accounts opened up 74.67% in March, and the number of new online accounts has risen to 33.91% of the company's total number this year.

Many brokers have made preparations for information technology in advance for ordinary transactions, margin trading, stock options, abnormal transaction monitoring and other systems, and promptly postponed the appointment appointment business, the maturity date of the margin trading contracts, liquidation and settlement, and carried out equipment inspection, system preparation, emergency plan verification, and so on. Even the Changjiang Securities, which is headquartered in Wuhan, continues to operate in the core area of the epidemic.

Overall, however, in the 1-3 month, the overall business of the securities industry continued to decline significantly compared with the same period last year. Revenue and net profit fell to a certain level. In the first quarter of 2020, 65 brokerages realized operating income of 73 billion 104 million yuan, down 1.84% compared to the same period last year, achieving a net profit of 31 billion 34 million yuan, up -7.75%.

Attached chart: brokerage business report card for the first quarter of 2020 (before revenue TOP20)

The research team noted that, especially in March, the global outbreak of the new crown pneumonia epidemic triggered a huge global stock market shock, and the A share market also inevitably entered a trough, which directly led to the weakening of the brokerage brokers and the two financial market. In terms of brokerage business, the average daily turnover in March was 921 billion 700 million yuan, up -11.25% compared with the previous year. In terms of two financial services, the balance of Shanghai and Shenzhen two cities in March totaled 1 trillion and 70 billion yuan, up from +15.49%, -3.38%, and two financial balance since December 2019, and March for the first time in 4 months. However, as far as all brokers are concerned, the ability to develop industry and resist risks is different. The Matthew effect is obvious, and the stronger the scale is, the stronger the risk resisting ability of the securities firms is.

Such as CITIC Securities, China Merchants Securities, CITIC investment and other enterprises, even in the face of extreme events in 2020, still achieved a double growth in net profit and revenue. Small and medium brokerages such as Chuang securities and Oriental Citigroup fell into losses in the first quarter, while Western securities and Southwest Securities net profit fell more than 50%. In the first quarter, Changjiang Securities, which is located in the center of the epidemic area, has lost nearly 15.28% of its revenue and net profit. Its net profit has declined by 16.99% and a half respectively.

Showing "killer": giving full play to the function of financing intermediary

On the whole, no matter what measures the securities company takes to cope with the epidemic situation and fulfill its social responsibilities, in the final analysis, it relies on the core competitiveness of the broker itself, that is, the strength of the investment bank as a financing intermediary. This capability is also the best tool to achieve the precise service of the real economy "epidemic prevention" and to play the function of the financial institutions.

The spread of the new crown pneumonia has undoubtedly caused great difficulties for the investment banking business of the securities companies. But even in the most difficult period, all major brokerages have new investment bank projects in an orderly manner, and have played the role of capital market in serving the real economy. According to the research team statistics, in February 2020 -4 10, there are still 116 listed companies to complete equity financing, the amount of financing up to 254 billion 65 million yuan; 36 enterprises IPO application received by the SFC.

Attached chart: equity financing during the epidemic period (February 2020 to April)

Among them, a typical case includes IPO, which was launched by the securities industry during the epidemic period. In February 11th, the Fujian SEIT new material Limited by Share Ltd, which was sponsored by Underwriters, was officially listed on Shanghai Stock Exchange. Everbright Securities Investment Bank team also aims at the IPO project of a key private enterprise in Hubei Province, maximizing efficiency, completing the company's internal approval before February 17th, and at the same time, the Everbright Securities Company has contributed to the delayed payment of the other enterprise, and has initiated joint notification with the enterprises through the point to point telephone and WeChat communication, and issued a notice in the news media. 。 After the cooperation of all parties, investors finally completed the payment under the 294 networks without a single leak.

In addition to equity financing projects, on the other hand, it provides efficient and convenient financial services for epidemic prevention and control, helps and supports enterprises to complete important project construction and epidemic prevention and control work. As an important participant in the capital market, securities companies take an active part in the underwriting of the epidemic prevention and control bonds, which is also an important measure for securities companies to use capital market expertise to support epidemic prevention and control. One.

Since February this year, enterprises facing epidemic areas or raising funds have been used for epidemic prevention and control related "epidemic prevention and control bonds" intensive issuance. According to statistics, as of April 10th, 49 brokerages involved in the issuance or underwriting of the epidemic prevention and control debt totaled 206 (including more than one issue of bonds issued by the same body), the total size of the issue amounted to 185 billion 186 million yuan, and the main types of debt issuance were short-term financing bonds, corporate bonds and medium-term notes. Among them, CITIC, CITIC Securities, Guotai Junan and Haitong Securities participated in 38, 34, 26 and 26 items of control and debt issuance respectively. Dongfang securities, Xingye securities and Guohai Securities respectively won the "war epidemic thematic bonds" 150 million yuan, 80 million yuan and 60 million yuan.

It is worth mentioning that in addition to the original capital strength, investment banking firm securities companies, some small and medium enterprises also played a regional advantage, in the control of debt issuance has also achieved good results. If the Yangtze River Securities participated in the Wuhan contemporary Ming Culture Sports Group Limited by Share Ltd, Wuhan automobile four water co Governance Project Management Co., Ltd. green project revenue bonds were approved; the Joint Venture Investment Group Co., Ltd. and Minsheng Bank, the Joint Venture Investment Group Co., Ltd., 1 billion yuan debt financing plan was adopted for the record, and the raised funds will be given priority to the epidemic prevention and control.

Attached chart: ranking of Underwriters' financing in -4 months February 2020 (TOP20)

Specifically, as far as the underwriting of corporate bonds is concerned, as of March 27, 2020, 49 securities companies undertook 98 of the epidemic prevention and control debt, helping 87 issuers in 20 provinces to complete the financing of 97 billion 231 million yuan. Among them, the Hubei area "epidemic prevention and control debt" 10, the total scale of 9 billion 300 million yuan.

The research team found that the actions of the war makers in the securities business started mainly from four aspects: first, the "war epidemic" in real terms, through donations and donations, to ensure the demand for materials in the affected areas; second, subscribe products with their own funds to boost market confidence, but at present, due to the stock market turmoil, there has been a comeback of the equity pledge risk that has been digested before, and there are still many stockholders' mortgage devaluation. The three is the normal exhibition industry. On the one hand, it protects the mobility of shareholders and enterprises. During the epidemic period, it provides timely and adequate financial services for the real economy and investors. On the other hand, although the overall industry revenue and profits have declined year by year, some enterprises have also resisted the pressure on the operation caused by the epidemic. Four, we should give full play to professional advantages and actively provide financial support. It is also the core competitiveness of securities companies.

Therefore, we think that as an important service institution in financial market, securities companies provide an important guarantee for financial institutions to support epidemic prevention, which is the embodiment of social responsibility of securities companies. But at the same time, securities companies also provide more professional and thoughtful services according to the needs of users, such as reminding investors to pay attention to risks and keeping good information disclosure "good".

?