Jinwu Finance News | CITIC SEC stated that based on the changes in the funding situation of 42 listed Banks in A-shares, the overall allocation by Institutions is expected to recover in 2024. The scale of passive Funds has greatly increased, and there is a continuous increase in the allocation of Bank stocks. Active Funds' Hold Positions in Bank stocks are also steadily increasing. There is significant space and willingness for insurance funds to increase their allocation to Bank stocks, and the northbound capital's Hold Positions have shifted from volatility to stability while maintaining a high allocation. Looking ahead, the positive influence of new public offering regulations, combined with the ongoing demand from insurance funds for stable-return equity assets, indicates that there is still room for increased allocation by Institutions.
Looking to the future: 1) Passive Funds are expected to shift from rapid growth to stable growth; 2) New public offering regulations are likely to have a positive impact on the allocation behavior of active Funds; 3) In a low-interest-rate environment, the demand from insurance funds for stable-return assets still exists; 4) The flow of northbound capital will depend more on macroeconomic cycles and overall market sentiment. This institution believes that the funding situation follows a long-term logic, including an increase in the allocation ratio of insurance funds to equity assets and the high-quality development of public Funds, which has a long-term allocation effect and solidifies the valuation floor of the Sector in the short term.
Currently, the asset quality data of Banks is stable, with a decrease in the non-performing loan generation rate for public loans, but the quality of retail credit assets still needs close attention. For investment, the more important logic is that macro policies are directed towards reducing systemic risks in the Banks, which helps investors reprice the Banks' net Assets. This institution predicts that this is the inherent driving force for the rise in industry valuations in 2025. In terms of individual stocks, two main lines can be focused on: 1) High-cost performance varieties, selecting Banks with performance growth expected to exceed comparable peers in 2025, superior dividend returns, and favorable valuation space; 2) Mid- to long-term allocation varieties, choosing Banks with distinctive business models, high ROE, low volatility, and significant market expectation gaps.
