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Source: Times Finance Author: Jin Zixin

Does the brokerage firm’s daily limit rely on netizens?

Over the weekend, a blogger named "Shanghai Uncle (Big A Love in Late Autumn)" posted videos on multiple platforms to express his views on the market, in which he specifically mentioned the leader of the securities sector, CITIC Securities (600030.SH). Shanghai Uncle clearly stated, "Next week, CITIC Securities will hit the daily limit. If it continues to rise by the end of July, it will push the stock market up 800 points."

In the morning of July 22, the securities sector opened higher. CITIC Securities hit the daily limit in the call auction, and fell back to about 2% after the official opening, and then rose again in the late trading. As of the close of the day, CITIC Securities rose 4.13% to 20.19 yuan per share, achieving "ten consecutive positive days".

In addition, many securities stocks performed well on the day. Zhongshan Securities' parent company Jinlong Co., Ltd. (000712.SZ) hit the daily limit in the morning, while China Merchants Securities (600999.SH) rose slightly by 0.27%. Since July 9, China Merchants Securities has risen in the other nine trading days except for one trading day with a slight drop. Huatai Securities (601688.SH) and Orient Securities (600958.SH) also maintained an upward trend during the same period.

Image source: Tuchong Creative

Securities firms have always served as the “indicator lights” for the market to open up, and are known as “Bull MarketThe securities sector collectively rose this time, while the dividend sectors such as banks and energy that had been rising in the previous period suffered a correction.PositionsJudging from the situation, the securities sector will remain underweight in the second quarter.

CITIC Securities rose 15.37% in 10 trading days

On July 22, the popularity of CITIC Securities was ignited by the remarks made by video blogger Shanghai Uncle Weekend, and the attention on both sides increased rapidly.

The Shanghai uncle also mentioned, "I think I am not optimistic enough, and I need to adjust my expectations for CITIC Securities. The previous target price was 450 yuan, and I expect it to rise to 68 yuan by the end of this year, and then triple to more than 300 next year. In the long run, I will raise the target price to 700 yuan, far surpassing Moutai and becoming the company with the largest market value in the A-share market."

Shanghai Uncle did not provide any analytical basis for the statement that CITIC Securities will hit the daily limit this week. However, since July 9, CITIC Securities has started the "ten consecutive positive" mode, and its stock price has indeed been rising steadily, with a 15.37% increase in 10 trading days.

But from the second quarter of 2024,Raised fundsAccording to the statistics of holdings, the securities sector remains underweight. Shu Siqin, chief analyst of non-bank stocks at Guojin Securities, pointed out in a research report that "from the second quarter of 2024, the proportion of public fund allocation in the non-bank sector has increased slightly month-on-month, but it is still significantly underweight."

His team has compiled statistics on the top ten heavily-weighted stocks of active equity public funds (scope: ordinary stock and mixed funds, excluding index funds) in the second quarter of 2024. The overall allocation ratio of the non-bank financial sector was 0.77%, an increase of 0.07pct from the first quarter and a low of 5.35pct; among them, insurance sector fund holdings bottomed out and rebounded, the allocation ratio increased, and the securities sector fund holdings and allocation ratios further declined.

Liu Xinqi's team at Guotai Junan Non-Banking Finance also expressed a similar view: "Under the market adjustment, the securities sector was slightly reduced, and the proportion of public funds' holdings dropped from 2.60% to 2.50%, and the sector was underweight by 0.68pct."

Liu Xinqi's team also conducted a data analysis of the fund's holdings in the research report. The "Securities King" Oriental Fortune (300059.SZ) was again reduced in the second quarter, and the proportion of its holdings by market value dropped from 0.77% to 0.65%; China Galaxy Securities (601881.SH) was also reduced in its holdings, and the proportion of its holdings by market value dropped from 0.023% to 0.019%.

Haitong Securities (600837.SH) and CITIC Securities were slightly increased, with Haitong Securities' holding ratio increasing from 0.20% to 0.21% and CITIC Securities' holding ratio increasing from 0.67% to 0.68%. Liu Xinqi's team believes that "the trend of strict supervision of securities companies will continue, and the process of supply-side reform is also expected to accelerate. We recommend targets related to mergers and acquisitions."

The rise of securities firms is affected by many factors

From the news perspective, industry insiders believe that the recent activity in the securities sector is affected by multiple factors.

On July 22, the National Interbank Funding Center authorized by the People's Bank of China announced that the one-year loan market benchmark rate (LPR) was 3.35%, and the LPR for more than five years was 3.85%, both down 10 basis points from the previous period. This is the second adjustment of the LPR this year. In February, the LPR for more than five years fell by 25 basis points.

Last week, the Third Plenary Session of the 20th Central Committee of the Communist Party of China reviewed and passed the "Decision of the Central Committee of the Communist Party of China on Further Comprehensively Deepening Reforms and Promoting Chinese-style Modernization" (hereinafter referred to as the "Decision"). Many statements in the decision mentioned the key directions and goals for the future development of finance. Overall, it is necessary to continue to deepen financial reforms and coordinate development and security.

When interpreting the fifteen key details in the "Decision", Guo Lei, chief economist of GF Securities, mentioned that the "Decision" pointed out the need to formulate financial laws and bring all financial activities under supervision in accordance with the law; to build a financial stability guarantee system that effectively prevents and controls systemic risks; and to build a "firewall" between industrial capital and financial capital.

At the same time, the Decision proposes to improve the function of the capital market in coordinating investment and financing. Guo Lei believes that this may represent an important idea for the current stage of capital market reform. Specifically, it includes supporting long-term funds to enter the market; strengthening the delisting system; improving the behavioral regulation and constraint mechanism for major shareholders and actual controllers; and improvingDividendsIncentives, constraints, etc., and coordination of investment and financing will be conducive to improving the endogenous stability of the capital market.

Guo Lei also mentioned that judging from the Decision,Angel InvestmentPrimary market investment funds such as venture capital and private equity investment are given the role of "patient capital", and government investment funds will also play an important leading role.