Jinwu Financial News | China Mainland Banking stocks are collectively rising, with Industrial And Commercial Bank Of China (01398) up 2.3%, ZYBANK (01216) up 1.67%, Agricultural Bank Of China (01288) up 1%, China Construction Bank Corporation (00939) up 0.8%, and Bank Of China (03988) up 0.79%.
The report from Galaxy Securities points out that current macro policies are becoming more proactive, focusing on expanding domestic demand and stabilizing market expectations. The fiscal policy is especially active, creating favorable conditions for the banks' loan business. At the same time, monetary policy has also shifted towards a more accommodative direction, timely adjusting deposit reserve ratios and interest rates. Although banks' interest margins may still face pressure, the optimization effect of debt costs is expected to accelerate. While continuously paying attention to preventing and resolving risks in key areas, the asset quality of the banking industry is expected to improve. With the deepening of the state-owned enterprise reforms entering the final phase, there is an increased emphasis on Market Cap management, which may enhance the overall valuation level of the Banking Sector. In summary, Galaxy Securities is bullish on the allocation value of the banking industry in investment portfolios.
CITIC SEC stated that the Central Economic Work Conference has set the direction for 2025 monetary policy, indicating that the impact of banks' interest margins primarily depends on the pace of interest rate cuts on loans and deposits as well as the savings on financing costs. The meeting also set the expansion of domestic demand and boosting consumer spending as the top priorities for next year, with the implementation and effectiveness of related policies poised to alleviate expectations regarding the quality of banks' retail loans. Furthermore, the National Financial System Working Conference has reinforced the tone toward financial risk prevention, and under the increased intensity and effectiveness of real estate and localized risk policies, expectations for credit risk in the banking industry may further ease next year. As the end of the year and the beginning of the new year approaches, it will enter the season of increased allocation for Insurance companies. Bank varieties that are high in dividends, low in volatility, and stable in operation are expected to remain the direction for asset allocation. From the perspective of individual stocks, two main lines are recommended in the 1-3 months horizon: ① low-volatility varieties contribute to steady return space, banks with high dividends and high capital have more allocation value; ② growth varieties contribute to elastic return space, companies with excellent business models have more valuation space.