China Securities Regulatory Commission: The development of high-quality investment banks is the need to implement the decision and deployment of the State Council on the development of the capital market, and is also an important means to promote and expand direct financing. There are many ways to promote it, which are still under discussion.
The industrial structure determines the financial structure, and the rise of the new economy leads to the rapid development of direct financing: the experience of all countries shows that the launch of mixed industry pilot projects, the substantial increase in the proportion of direct financing, the rapid development of the equity market, and the transformation of new and old drivers of social capital allocation economy complement each other. In the context of the transformation of new and old economic drivers, China's main financing demanders have evolved from the previous real estate and infrastructure construction into new economic sectors. The financial structure also needs to be actively adjusted to adapt to industrial changes. China's financial structure should shift from broad credit financing based on credit thinking to direct financing more suitable for the lighter new economic drivers.
In order to meet the financing needs of the new economic kinetic energy industry and achieve an increase in the proportion of direct financing: 1) Changes in the allocation of social funds:
Moving from credit and quasi credit assets to standardized assets is the core goal of the new asset management regulations. Since 2018, various asset management institutions have been firmly advancing on the path of net worth and active management transformation; 2) Changes in financing channels: Since most of the customer resources in the era of indirect financing belong to banks, it is the key to enable banks to participate in direct financing from the core intermediaries and from the bottom to solve the development momentum of direct financing, which is conducive to the transformation of industrial structure and the expansion of the total amount of direct financing market.
If we take the promotion of mixed banking and securities business as the path to develop high-quality investment banks, it is expected to issue investment banking licenses to pilot banks first, simultaneously promote the reform of banking system and talent marketization, and promote the revision of laws in the next stage: experience of various countries shows that pilot promotion first and then revision of laws is an effective strategy to control spillover risks. We expect that in the first stage, it is expected to focus on the issuance of narrow investment banking licenses with stock underwriting qualifications as the core; In the second stage, we will promote the revision of the Commercial Bank Law and other relevant provisions, and improve the institutional basis for mixed banking and securities business; At the same time, under the historical mission of making direct financing bigger and stronger to adapt to the transformation of economic momentum, commercial banks are expected to be more motivated to promote institutional reform and professional capacity building.
Banks should increase rather than divide the stock, and the core business of transformation and upgrading of leading securities firms is not expected to be involved by banks in the short term: the primary goal of bank securities mixed industry is to expand the direct financing increment, and expanding the total direct financing plate has a positive effect on the whole industry. It is expected that banks will not set foot in the future star business of the leading securities companies - large sales and trading business based on equity and derivatives. In addition, the current securities companies are still significantly more competitive than banks in terms of mechanism.
The pilot of mixed operation will become the starting point for accelerating the differentiation of the securities business sector, which will benefit the leading securities companies. First, small and medium-sized securities companies with no differentiated competitiveness will speed up their liquidation. Second, the scarcity of professional ability will make the investment value of the mechanism excellent securities companies more prominent. Third, in the era of two-way mixed operation, it is expected that the capital funds of securities companies, customer capital securities business constraints, account function constraints, etc. will gradually make breakthroughs, Finally, high-quality securities companies with mechanisms, capabilities and preparations will usher in historic strategic opportunities. After the launch of the mixed industry pilot, it is expected that the reform policy of focusing on the head and strengthening the head of the securities industry will accelerate its implementation. If the head securities companies can follow the policy, strengthen their inherent advantages in equity and derivatives business, and create professional capabilities and first mover advantages that are difficult to be replaced by banks, this is the starting point for the internal differentiation of the securities industry and the long-term revaluation of the head securities companies.
Investment suggestions: 1) Banks: introduce commercial banks into the direct financing market, which is conducive to the transformation of China's industrial structure and the transformation of banks' profitability. The first A-share portfolio: Ping An Bank, Everbright Bank, Bank of Hangzhou, Bank of Nanjing, Industrial Bank, Postal Savings Bank; A share long-term portfolio: China Merchants Bank, Changshu Bank, Bank of Ningbo; The first portfolio of H-shares: Postal Savings Bank, China Merchants Bank and China Construction Bank. 2) Brokers: The ability of equity business is scarce, and brokers are especially valuable for financial holding. International experience shows that even in the era of deep mixed industry, the bank led financial holding strength is in the big fixed income business, and the securities firm led financial holding strength is in the equity business. The vast blue ocean of big equity assets is still open to the leading securities companies with excellent mechanisms. Individual stocks are the first to promote Huatai Securities, CITIC Securities, CSCI-H, CICC, and focus on Guotai Jun'an, China Merchants Securities, and Guojin Securities.
Risk warning: the macroeconomic slowdown triggered adverse risks, and unexpected risk events occurred in the process of promoting the Bank Securities pilot project
