Brokerage Stocks Enter The Valuation "Offensive Cycle": Bull Market Precursor Or Industry "Historical Opportunity"?

The market is still holding high expectations for the rise of the brokerage stocks. Only in the current market situation, the positive effects of securities brokerage include speed up of registration system reform, deregulation of T+0 transactions, and the expectation of aircraft carrier institutions.

The restlessness of the securities sector is attracting the attention of the entire A share market.

Wind data show that since June 18th, the securities index of China Securities has risen by more than 8%, while in the same period, the total number of cards has risen by less than 2%, or more than 4 times the total number of certificates in the same period.

From the past history of the A share market, the rise of the brokerage stocks is likely to be a precursor to the bull market and a certain probability is the last turning point in the short-term rise cycle of the A share market.

According to an interview with a number of agencies in the twenty-first Century economic report, the market still holds high expectations for the rise of the brokerage stocks. Only in the current market situation, the positive effects of brokerage stocks include speed up of registration reform, loosening of T+0 transactions, and the anticipation of aircraft carrier structure.

In the industry view, the above factors are bringing obvious opportunities to the securities companies. At the same time, the bull market expectations are also looking at the cyclical reasons for the brokerage stocks in the light of the increase in the activity of A share trading.

Bull gun?

In the industry view, the recent rise in brokerage stocks is evidence that the A share market is expected to enter the bull market cycle.

"Shenzhen's index and gem have entered a technical bull market, and the further rise of brokerage stocks indicates that the market is gradually forming consensus on the bull market expectations." An analysis of the head of a private equity firm in Shanghai said, "brokerage firms actually played a role as an indicator signal, because usually the rise of brokers often means that the bull market is coming."

Twenty-first Century economic news reporter observed the past 10 years of historical rule, the rise of brokerage stocks usually indicates the arrival of bull market expectations.

The most typical example is that in the short period of 2 months from the end of 2014, from November to December, the securities index of CSI rose to 122.89%, while many brokerage stocks experienced a rare "daily limit" stage at that time.

Then, the A share market set off a vigorous bull market in the first half of 2015, and the Shanghai Composite Index rose to 5000 points.

"At that time, the rise of brokerage stocks and monetary policy had a relatively large relationship. A drop in the right rate at the end of 2014 sounded the clarion call for the rise of securities companies at that time, coupled with the regulatory authorities' request for capital expansion in the securities industry and the registration reform to prepare for the war." A strategic analyst at a listed brokerage firm in Beijing pointed out that "such a rise in brokerage stocks also led the market to further believe that the bull market is coming."

"But at that time there was a problem of excessive growth, which laid a hidden danger for the subsequent stock market crash, because many of the funds were imported by various levers." The analyst said, "but it can be seen that the excessive rise of brokerage stocks often indicates a bull market coming."

Coincidentally, in the early stage of "maverick city" which rose by 22.30% in 2019, the stock index continued to rise in the stock market. In 2019, the index of securities companies rose by 48.97%, or more than 1 times that of the Shanghai Composite Index in 2019.

It is worth mentioning that the rise of brokerage stocks can not become a bull market signal at all times. For example, in the fourth quarter of 2015, the index of securities companies rose by 39.53%, far exceeding the 15.93% increase in the same period. However, in 2016 January, A shares still fell sharply after the pilot fusing mechanism, and the Shanghai Composite Index fell by 22.65% in one month.

"Brokerage stocks can be regarded as a reference for the bull market in the early stage, but it is only one of the references. The subsequent development of the market depends on many factors." Beijing private equity investment manager pointed out.

Multi factor co promotion

In addition, according to incomplete statistics of twenty-first Century economic report, only 3 trading days in June 22nd -24, including founder, new era, Xingye, Huachang, Ping An, and so on, no less than 12 sellers' organizations have released collective research reports on promising brokerage sector.

In the industry view, behind the rise of this round of brokerage stocks, in addition to the bull market expectations expected by the market, there are actually a number of factors of common role.

Among them, registration system and other reforms to the brokerage investment banking business development dividends, is regarded as one of the important reasons.

"The reform of the science and technology board, the gem and the selection layer are all being pushed forward, and the securities business will get bigger growth in the investment banking business. However, with the advance of the market reform, the requirements for the pricing and underwriting ability of the securities companies will also increase. These phenomena may also further guide the polarization of the industry." The analysts pointed out.

In addition, the bonus of the industry system accompanied by innovation is accelerating.

CSC's non bank financial team said that the next stage of the securities law convergence rules, the gem registration system reform rules and norms of market participants will continue to fall, and the dividend policy of the securities industry can be expected.

"Guo Shuqing, chairman of the China Banking Regulatory Commission, said that the Banking Regulatory Commission recently proposed six initiatives to support the development of the capital market. With the support of the bancassurance institutions, the capital market will play a more extensive and positive role, and the securities industry as the core intermediary of the capital market will occupy a more important position." CITIC Securities.

China and Thailand securities also pointed out that we should seize the "innovation cycle" of this round of brokerage stocks, while the continuous accession of medium and long term investors, the change of trading system represented by T+0 and market makers, and the continuous opening of finance will become an important support for industry innovation, and the upgrading of the securities industry will bring a significant boost to the fundamentals.

"The continuous improvement of the leverage of brokerages is usually initiated in the opening cycle of innovation." we can see that in 2019, the securities companies increased leverage obviously. China and Thailand Securities said, "the scale of direct financing, the transformation of services in the economy, and the response to new financial liberalization require greater and stronger securities industry, while supplementary capital is the premise and encouragement is sustainable."

Ping An Securities also said that the current securities dealers are ushering in "historical development opportunities".

"The reform of the capital market has brought opportunities for the development of the securities industry. It is expected to change some of the business models and the competition pattern of the industry, and has a long-term valuation support for the sector." Ping An Securities said.

The leading Huijin system

In this round of stock market quotes, a group of special subjects has attracted the attention of the market.

In twenty-first Century, according to Wind statistics, according to the statistics of Wind, in many brokerage stocks, Everbright Securities ranked the top of the industry in terms of nearly 5 trading days up to 35.19%. In addition, the two brokerages of China Galaxy and Shenwan Hongyuan rose by 18.85% and 9.26% respectively, ranking third and eighth respectively in the industry.

It is worth mentioning that the above three brokerages belong to Huijin securities brokerage company, and this has also attracted some institutions to further stimulate the "head mechanism to accelerate integration" conjecture.

"Before, because of the requirements of the first controlling one, Huijin's securities dealers needed to further integrate, but later they did not know what to do. Although the merger of CIC and CIC, Vanward Hongyuan merged, but on the whole, it still did not meet the requirements of the" one control one ". A private equity trader in Shanghai pointed out that "therefore, it is not possible to exclude the possibility that market funds will accelerate the integration of Huijin securities brokers at the top level of gambling, and there are also good buying points for securities companies."

In fact, since last year, the securities industry has been carrying the expectation of "aircraft carrier institutions". In April, there was a rumor that CITIC Securities and CITIC had been integrated in the market, resulting in a rise in stock prices.

In the view of analysts, compared with CITIC and CITIC, the management promoted the integration of securities assets within Huijin.

"If the requirements of the" one control one "are still effective, Huijin securities brokers will have the necessity of further integration, and can also meet the requirements of the industry to build aircraft carrier institutions. "Of course, the current stock price movement may also be expressed in the market speculation, whether this trend is uncertain," said a non silver financial analyst of a medium-sized brokerage in Beijing.

"At the level of institutional supply, there are many innovations in brokers. But from the point of view of transaction, we are more concerned about the opportunities brought by event driven. If the head brokers further expand their volume, increase their capital and expand their shares, and even say that there is a possibility of further merger between large brokerages, the driving effect of the industry concentration will be very obvious, which will also optimize the efficiency of the industry and raise the stock market. The valuation center. The above private placement agency official said.

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