On October 14th, news: $China Mainland Banks (LIST1239.HK)$ opened higher collectively, as of the time of writing,$ICBC (01398.HK)$ up 4.07%, at 4.86 Hong Kong dollars; $ABC (01288.HK)$ up 3.24%, at 3.98 Hong Kong dollars; $CM BANK (03968.HK)$ Rising by 3.51%, closing at HK$41.25; $BANK OF CHINA (03988.HK)$ Increasing by 3.47%, closing at HK$3.88; $CCB (00939.HK)$ Up by 3.16%, closing at HK$6.2.

On the news front, on October 12, the State Council Information Office held a press conference to introduce the relevant information on 'increasing the counter-cyclical adjustment intensity of fiscal policies and promoting high-quality economic development'. At the meeting, Minister of Finance, Liao Min, stated that the issuance of special national bonds to support large state-owned commercial banks in replenishing core Tier 1 capital has been initiated. The Ministry of Finance, together with relevant financial regulatory departments, has established an inter-departmental working mechanism to assist commercial banks in expediting their work and providing efficient services. Currently, they are waiting for each bank to submit specific plans for capital supplementation.

Citic Sec released a research report pointing out that the intensification of counter-cyclical adjustments in fiscal policies, aimed at easing two major credit risks (local government financing vehicles and real estate sectors), will help improve the stability of bank net assets and positively impact bank stock valuations. While the capital replenishment of state-owned banks may have some dilution effects, the magnitude is expected to be controllable. In the long run, it is expected to strengthen the sustainable development capacity of large state-owned banks. Overall, the fiscal ministry meeting on October 12 is a substantial bullish factor for bank stocks, further enhancing sector certainty. Investors are advised to actively increase their allocation.

Morgan Asset Management believes that the emphasis on the significant debt space and deficit expansion space of central finance by the Ministry of Finance in this press conference has preserved room for future fiscal policy reinforcement. The policy of issuing special national bonds to support large state-owned commercial banks in replenishing core Tier 1 capital is worth noting. Apart from preventing financial risks, it also aims to boost the real economy through the financial leverage of banks, potentially enhancing the willingness for increased household consumption and corporate investment.