There are also relevant developments in the Insurance Sector; Zhong An Xinke's "Business AI Series Products" is fully integrated into the DeepSeek large model, and the fusion of Insurance and AI brings many beneficial opportunities. Its application in various specific scenarios helps enhance intelligent effects. The interest spread pressure caused by low long-term interest rates is the core factor suppressing the valuation of Insurance stocks. The stock market's rebound combined with a low base is expected to bring good profit growth in Q1 2025, driving a periodic beta market for Insurance stocks.

Sinolink's main viewpoints are as follows:

CHINA CINDA, Oriental Asset, and Great Wall Asset are being transferred to Central Huijin, further deepening financial regulatory reforms.

On February 14, the CSI 800 Financials and Real Estate Index company, CHINA CINDA, Oriental Asset, and Great Wall Asset announced that shareholders intend to transfer their holdings to Central Huijin. After the transfer is completed, Central Huijin will hold 58%, 72%, and 74% of the total issued shares of CHINA CINDA, Oriental Asset, and Great Wall Asset, respectively, becoming their controlling shareholder. On the same day, Xinda Securities and Dongxing successively announced that their actual controllers would change from the Ministry of Finance to Central Huijin after the transfer is completed. Central Huijin actually controls six Brokerages: China International Capital Corporation, China Galaxy, SWHY, Xinda Securities, Dongxing, and Great Wall Guorui Securities, with increasing expectations of mergers and reorganizations, suggesting to pay attention to subsequent merger opportunities under the same actual controller.

Brokerages are accelerating the deployment of DeepSeek, focusing on the application progress of AI in Finance.

DeepSeek-R1, with its features of open-source, lightweight, and low-cost deployment, accelerates the inclusive application process of AI in vertical industries, particularly suited for high data density scenarios in the Financial Industry. In the future, it is expected to foster innovative business models like AI+Investment Advising, Investment Research, Asset Management, Operation, Marketing Services, Customer Service, and Risk Control. Currently, 30 brokerages have announced the integration or localized deployment of DeepSeek, which excels in document processing, intelligent Q&A, and knowledge retrieval. These companies are integrating internal knowledge bases and applying them in internal scenarios, such as intelligent code writing, AI office work, and risk management compliance, enhancing information processing efficiency and decision accuracy. In the future, it will empower and even reshape core links in investment advising, investment research, and marketing services.

Investment recommendation:

The firm believes that factors such as active market trading, improved brokerage Business, accelerated deployment of DeepSeek, and enhanced acquisition expectations will catalyze a dual uplift in the valuation and performance of the Brokerage Sector. The fundamental outlook for brokerages in 2025 is expected to reverse under a low base. By Business, the brokerage Business benefits from increased trading volume, self-operated Business gains from stock market rises and equity market rebounds, and the investment banking Business has reached a relatively low point for IPOs. It is anticipated that under the new acquisition policies, mergers and reorganizations will contribute additional growth, with securities financing balance continuing to recover. Reviewing previous expansions in brokerage valuations above 1.9X in a liquidity easing context, the current brokerage valuations are below 1.5X, indicating potential upside. It is recommended to focus on three main lines for the Brokerage Sector: (1) Strong beta Business (equity investment elasticity + trading elasticity) brokerages are more favored by the recovery of the equity market. (2) With the acquisition effects of Guotai Junan and Haitong leading to increased merger expectations, it is advisable to pay attention to potential acquisition opportunities among brokerages. (3) Focus on advancements in AI applications, particularly AI+Finance symbols.

Insurance Sector.

ZhongAn Technology's "Business AI Series Products" are fully integrated with the DeepSeek large model. The firm is optimistic about the opportunities arising from rich data accumulation and application scenarios driven by Insurance + AI. ZhongAn Technology's "Business AI Series Products" aims to integrate intelligent technology into multiple product applications, providing customers with end-to-end empowerment from AI infrastructure, intelligent components, intelligent services to agent construction and scenario solutions. With this full integration of the DeepSeek large model, ZhongAn Technology will leverage DeepSeek's excellent reasoning capability and natural language processing ability to significantly enhance the intelligence of its AI product line.

Specific application scenarios include:

1) AI Middleware x DeepSeek: Incorporating DeepSeek-R1 and DeepSeek-V3 as model sources, enterprises can easily choose from this series of models to build super agents with stronger intelligent cores for business process optimization and intelligent decision support, helping enterprises achieve intelligent operation and management. 2) AI Outbound Call x DeepSeek: Helping to achieve a more accurate understanding of customer intent at a friendlier cost and assisting in establishing a continuously optimized operating loop based on strong data analysis capabilities. 3) AI Quality Inspection x DeepSeek: Utilizing DeepSeek's powerful analytical capabilities and natural language understanding, the AI quality inspection platform can better understand outbound communication content and promptly identify hidden quality issues and risk factors. 4) AI Enterprise WeChat Operation x DeepSeek: Empowered by DeepSeek, the AI enterprise WeChat will better understand clients based on data like customer profiles and behaviors, creating personalized communication content more in line with customer needs and preferences at lower costs. The AI sector in China's insurance industry has been laying out for many years, forming a relatively mature AI all-scenario application with rich application data and scenarios. Under the catalysis of large AI models, AI efficiency is expected to further improve.

Investment recommendation:

The pressure on the spread due to low long-term interest rates is the core factor suppressing the valuation of Insurance stocks. The stock market is expected to experience a rebound, combined with a low base, which may lead to good profit growth in Q1 2025, driving a stage of β market for Insurance stocks. It is recommended to focus on three main lines for Insurance stocks: ① Property Insurance belongs to a high dividend defensive sector, with expectations for high growth in Q1 performance under a low base, likely resulting in a breakthrough in valuation. ② The high elasticity of the Hang Seng Technology sector driven by AI; focus on Hong Kong Internet Property Insurance symbols that are leading in technological layout. ③ The valuation rebound driven by the β of the equity market; focus on high equity elasticity life insurance symbols as well as Chinese life insurance symbols with low valuations.

Risk Warning

1) Fluctuations in the equity market; 2) Significant decline in long-term interest rates; 3) Capital market reforms not meeting expectations.