Finance Association, May 8 (Reporter Gao Ping) On the evening of May 8, the Chongqing Agricultural Commercial Bank announced that the board of directors reviewed and passed a bill to increase the bank's shares of Chongqing Water Resources Investment (Group) Co., Ltd. (“Chongqing Water Investment Group”), and that Chongqing Water Investment Group plans to increase its A-share holdings of the bank to 5%.

Industry insiders believe that generally speaking, the main purpose of shareholders to increase their bank stock holdings is to send a positive signal to the outside world and at the same time convey their confidence in the bank's future development prospects and recognition of long-term investment value to the outside world. According to Wind statistics, 13 banks have received significant shareholder increases since this year, and the type of entity that has increased their holdings is a company. The industry believes that bank stocks are stable and defensive, and at the same time have high dividends and investment attributes of state-owned financial institutions, and they are optimistic about the allocation value of fixed income attributes in the banking sector.

Chongqing Water Investment Group's plan to increase its holdings to 5% was reviewed and approved by the board of directors of Chongqing Agricultural Commercial Bank

Specifically, the 43rd meeting of the 5th board of directors of the Chongqing Agricultural Commercial Bank deliberated and passed the “Proposal on Reviewing Chongqing Water Resources Investment (Group) Co., Ltd.'s shares”. Based on recognition of the investment value of Chongqing Agricultural Commercial Bank, Chongqing Water Resources Investment (Group) Co., Ltd. plans to increase its A-share holdings of Chongqing Agricultural Commercial Bank to 5% with the approval of the Chongqing State-owned Assets Supervision and Administration Commission.

A Financial Services Association reporter inquired about the first quarterly report of the Chongqing Agricultural Commercial Bank and found that by the end of the first quarter, Chongqing Water Investment Group held 567 million A-shares of the Chongqing Agricultural Commercial Bank, with a shareholding ratio of 4.99%. It is the fifth largest single shareholder of Yunong Commercial Bank and is a state-owned corporation.

According to information, in November 2003, the Chongqing Water Investment Group was officially formed and became the first provincial water resources investment group in the country. In November 2019, Chongqing Water Investment Group completed a specialized restructuring and became a municipal state-owned key enterprise directly owned by the Municipal State-owned Assets Administration Commission. Since its establishment, the Group has invested more than 70 billion yuan in various types of investment. By the end of 2023, the Group's assets were close to 90 billion yuan.

According to the “Interim Measures on the Equity Management of Commercial Banks” issued by the previous regulation, investors and their related parties or co-actors who individually or collectively intend to hold or cumulatively increase their total commercial bank capital or share holdings by 5% or more shall be reported to the Banking Regulatory Commission or its dispatched agency for approval in advance. The approval of an administrative license to hold at least 5% of the total shares in commercial banks through domestic and foreign securities markets is valid for six months.

“The Bank's board of directors agreed to declare its (Chongqing Water Investment Group) shareholder status to hold 5% or more of the shares to the Chongqing Regulatory Bureau of the China Financial Supervisory Authority. We will continue to monitor the progress of this matter and promptly fulfill our information disclosure obligations in accordance with relevant regulations.” The Chongqing Agricultural Commercial Bank said so.

During the year, 13 banks received advice from important shareholders to increase their holdings and continue to pay attention to the dividend value of the sector

According to Wind statistics, a number of banks have increased their shareholders' holdings since this year. Among them, 13 banks have increased their holdings as companies. Apart from the four major banks receiving increased holdings from Huijin, the Bank of Jiangsu has received the highest amount of increase in holdings among the remaining 9 banks.

According to Wind data, from December 29, 2023 to March 9, 2024, Jiangsu Investment Management Co., Ltd. increased its holdings of the Bank of Jiangsu by more than 125 million shares, the Bank of Suzhou received more than 80 million shares from Suzhou International Development Group Co., Ltd. on February 21 this year, and the Shanghai Agricultural Commercial Bank increased its holdings by more than 6.4 million shares from January 3 to February 7 this year.

Industry insiders believe that generally speaking, shareholders' holdings increase their optimism for the company, while conveying to the outside world their confidence in the company's future development prospects and recognition of its long-term investment value. However, judging from the data, A-share banks are still in a state of widespread net capital failure. As of the close of trading on May 8, the net stock market ratio of all 42 A-share banks was below 1.

Dai Zhifeng, an analyst at Zhongtai Securities, said that bank stocks are stable and defensive, and also have high dividends and investment attributes of state-owned financial institutions; they have strong support for the bank stock market from an investment perspective, and at the same time, banking fundamentals are stable. Furthermore, from the perspective of bank stock investment, many brokerage analysts also continue to suggest focusing on the allocation value of the banking sector as a high dividend target. Qiu Dongrong, a well-known fund manager under Zhonggeng Fund, stated in the first quarterly report of the Zhonggeng Value Flexible Allocation Hybrid Fund that the investment direction the fund focuses on includes value stocks with high growth or profit flexibility. The main industries include banks, etc.

Qiu Dongrong believes that the valuation pricing of banks in the financial sector is extremely suppressed by long-term factors. In particular, banks with the best historical fundamentals in the sector have lower valuations than absolute positions, making it easier to choose. The banking business is similar but the competitiveness is different. The competitive advantage of excellent banks is specific and continuous. They obtain more agreed operating results from detailed capabilities such as customer service, deposit acquisition, accurate pricing, and risk management, resulting in resilient asset quality and strong endogenous growth, and good return potential.