When will bank stocks rise, and will bank stocks rise now?

Bank stocks will need a long bottoming process due to the economic crisis, and they will be bearish in the medium to long term.

It is recommended to pay attention to commercial retail, energy conservation and environmental protection, online media, Shanghai local, and other industries that benefit from the construction of the 11th Five-Year Plan and the transformation of economic growth mode.

We're coming out of the bottom! The warming of fundamentals will eventually support the market to break through!

Between now and next year, the second half of the bull market will be gradual.

**The trend is good, actively long, hold patiently;

Invest in China's bright future and share the joy of economic development.

**There are risks and investment should be cautious.

Bank stocks are not optimistic in the short term, but they are optimistic in the long term, and they will not recover until the middle of next year.

As a result of the subprime mortgage crisis, China's commercial banks have lost a lot of money by holding bonds from many foreign banks. Therefore, the annual report is not ideal, so it is recommended to go out.

In the long run, bank stocks should and will rise, the question is only when they will rise and whether you are suitable to invest in them.

1. In any mature capital market, high-quality bank stocks are the core investment targets.

In the case of the United States**, for example, the banking sector has been a large sector that has consistently delivered good returns to investors over the past three decades. Therefore, when it comes to blue chips in the US stocks, there will definitely be leading companies in the banking sector, such as Wells Fargo, Bank of America, Bank of New York Mellon, JPMorgan Chase Bank, etc.

2. A-shares are in the process of maturing, and high-quality bank stocks are stable and reliable investment targets.

The banking sector should be regarded as the most stable sector in the A-share sector. In particular, the large state-owned banks such as workers and peasants and China Construction basically have a dividend rate of more than 30% every year. Moreover, the stock price of bank stocks has been very low recently, and the dividend yield is relatively high, most of which are close to about 5%, which is significantly higher than deposits and wealth management.

Some banks, such as the Bank of Communications, have dividend yields greater than 6%.

From the perspective of stock price and valuation, the performance of the banking sector is significantly worse than that of the liquor and pharmaceutical sectors. However, in the long run, the overall trend of the banking sector is still sustained upward. And the leading bank stocks, such as China Merchants Bank, are still very strong in the long term.

Overall, China's high-quality banks are operating steadily and profitably, and have entered a new normal with economic growth. Low P/E ratios and high dividend yields on bank stocks will become more scarce, and valuation repair is to be expected. If you are a long-term value investor looking for solid returns, then good bank stocks can be used as ballast investments.

The current bank stocks, without **, have no hope in the short term, and there is a possibility of continuing to fall. This has a direct relationship with the current international and domestic economic situation, if there are bank stocks, it is best to throw away the stop loss.

Bank stocks are mainly issued by commercial banks that issue short-term loans to industrial and commercial enterprises**. Most commercial banks in Western countries belong to joint-stock companies, so commercial banks are also called joint-stock banks.

Investors should fully understand the investment risks, invest prudently, fully understand and clearly understand the risks contained in this wealth management product, participate in the transaction independently through their own judgment, and voluntarily bear the relevant risks.

Bank stocks are one of the few value depressions in China, and there has never been a bull market without the participation of bank stocks. If you confirm that China's bull market will enter a **cycle, bank stocks will**.

First, on 16 October, the central bank solicited public opinions on the "Commercial Banking Law (Proposed Amendments)". On the whole, although many new sections have been added in this amendment, the main purpose of this revision is to institutionalize the existing regulatory requirements, focusing on improving the legal framework, emphasizing risk management and control, and strengthening the constraints of the provisions.

Since its adoption in 1995, the Commercial Banking Law has undergone major changes in 2003 and minor changes in 2015.

Second, the central bank released the monetary and credit data for September: the scale of new social financing is trillion, and the previous value is trillion; trillions of new RMB loans, the previous value of trillions; M1 YoY, Previous Value, M2 YoY, Previous Value.

In September, the scale and growth rate of social financing exceeded market expectations, the credit structure continued to improve, and the growth rate of M1 continued to rise, all of which contributed to the continuation of economic recovery and alleviated market investors' worries about the sustainability of economic recovery to a certain extent. The relatively good recovery of the economy is conducive to the recovery of the banks' performance after bottoming out. Previously, the market still had doubts about the operating conditions in the third quarter, but if the profit growth rate of the banking industry in the third quarter was the same as in the first half of the year, the bottom of the industry's fundamentals could be confirmed.

Third, the market underwent a valuation switch in the fourth quarter, and the undervaluation of the banking sector had an attractive effect on institutions. In the fourth quarter, the pro-cyclical board with a safe valuation and upward prosperity prevailed, while the recent highs of individual white horse stocks that have risen sharply in the past two years have fallen sharply against the trend, indicating that some stocks with high valuations and downward revisions to performance expectations have a greater risk of decline once the performance expectations are lowered under the steady recovery of the economy but the convergence of liquidity margins. However, ROE is more robust than expected, and when the market style switches to the pursuit of solid income, the banking sector is the first choice.

Fourth, according to statistics, the bank board is prone to obtain excess returns in the fourth quarter. We have counted the relative returns of 14 years, including 2006-2019, and the bank has achieved positive excess returns in the fourth quarter of the year in seven years, with an average absolute return of about 13%. At the end of each year, the fund will be ranked, and in the fourth quarter, it will generally seek stability, and the bank board will become the cash of the repositioning, and it will be easy to obtain excess returns.

These are the main reasons for the recent rally in the banking sector, and there may be more performance in the second half of the fourth quarter.

The reasons for the surge in bank stocks may include:

1.Economic recovery: When the economy begins to recover, banks' profits typically grow as demand for corporate and personal loans increases and lending rates rise.

2.Favorable policies: Potential bank-friendly policies, such as lower lending rates and greater credit expansion, will boost the performance of bank stocks.

3.Attractive valuations: When the market is volatile, bank stocks are often seen as investments with a high margin of safety.

Regarding the trend of A-shares, here are some factors that may affect the market:

1.Macroeconomics: Global and Chinese economic conditions will affect the performance of the A** market. For example, factors such as global economic growth, ** policies and the pandemic may have an impact on A-shares.

2.Policy environment: China's ** policy and monetary policy have a great impact on the A** market. For example, loose monetary policy may boost market confidence and promote ****.

3.The basic business conditions of listed companies in the A** field will have an impact on the market performance. For example, earnings growth and performance improvement for high-quality listed companies will help drive ** higher.

4.Investor sentiment: Investors' confidence and sentiment in the market will also affect the trend of A-shares. Optimistic market sentiment can lead to ****, while pessimistic sentiment can lead to ****.

Please note that there are risks involved in investing in ** markets, and investors should fully understand the relevant risks when making decisions and invest according to their own risk tolerance. If necessary, you can seek advice from a professional investment advisor.

First, although the easing of monetary conditions and the improvement of asset quality have brought positive benefits to banks, the continued increase in macroeconomic downward pressure will lead to a decline in corporate earnings and household repayment ability, which will increase banks' credit risks. At the same time, the duration of monetary easing is uncertain, and once it is withdrawn, it will also have a greater impact on banks' funding costs and profits.

Second, the development of fintech has brought more challenges to traditional banks. Some banks are still working with fintech companies on a small scale, and the real changes that have been achieved are not enough to offset the impact of fintech. The rapid rise of fintech companies in payment, loans and other businesses will pose a great challenge to the main business of banks.

Third, the current favorable policies are limited to deal with the current difficulties caused by the epidemic, which does not mean that the regulatory policies will be loose for a long time, and once the macro environment improves, the regulatory policies may be tightened, which will also increase the pressure on traditional banks to transform.

In summary, although in the short term, easing policies and improved asset quality have boosted confidence in the banking sector, in the long term, the deep-seated challenges of increasing macro downward pressure, intensified impact from fintech and regulatory policy shifts have not disappeared and will still severely test banking participants. The market may have overly optimistically ignored these challenges, which also increases the likelihood of a sharp correction in A-shares and banks** in the future.

**The future trend of A-shares needs to be judged in depth from multiple aspects such as macroeconomy, policy environment and market structure, and should not be oversimplified.

First, at the macro level, the downward pressure on China's economy has not been fundamentally eliminated. The sluggish global economic recovery after the epidemic, coupled with the possible impact of the escalation of Sino-US frictions, will pose a greater threat to China's exports and employment, which may lead to continued weakness in domestic demand and a decline in income growth. While continued monetary and fiscal easing can offset these shocks to some extent, there are limits to their effects and increase financial risks.

To sum up, the possibility of a significant alleviation of China's macroeconomic downward pressure is not high, which also limits the space for a large number of A-shares in the medium and long term.

Second, at the policy level, the current easing policy is mainly aimed at the short-term impact of the epidemic, and once the epidemic is fundamentally alleviated, the easing policy will also face pressure to tighten. At the same time, the long-standing structural contradictions also need to be resolved by targeted reform dividends, and there is still great uncertainty about the implementation of real reforms. As a result, the boost that continued policy incentives can provide is also highly limited.

Third, at the level of market structure, the rapid rise of Chinese stocks and the Science and Technology Innovation Board shows that the capital market is accelerating structural changes, which will also have an impact on traditional blue-chip stocks and pan-A-share indices. At the same time, with the changes in the capital market, the rigid pattern will be further broken, and the growth of high liquidity and low lag will become the key direction of capital allocation. This also means that the space of traditional indices that rely on the support of a few blue chips will face greater limitations.

Recently, bank stocks have started to rise sharply, mainly due to the following reasons:

1.Expectations of rising interest rates. As the macro economy stabilizes and recovers, the market expects interest rates to rise in the future, which will increase banks' interest income, which will push up bank stock prices.

2.Non-performing loans declined. The proportion of non-performing loans (NPLs) of banks has continued to decline, and asset quality has improved significantly, which has alleviated investors' concerns about the asset quality of the banking sector, improved investor confidence, and boosted bank stocks**.

3.Fiscal policy is favorable. **Adopt fiscal policies such as RRR and interest rate cuts to support the real economy, which will increase banks' capital operation space, which is good for the development of the banking industry and the performance of bank stocks.

4.Structural opportunities. Bank stocks have been in a downturn in recent years, and there is more room for them, which has attracted the layout of structural opportunity funds and pushed the stock prices of bank stocks.

Looking ahead, if the following situations occur, bank stocks still have more room in A-shares:

1.Interest rates are rising as expected, which will significantly improve the profitability of banks and give bank stocks a sustained momentum.

2.The economy continues to stabilize, and the non-performing loan ratio continues to decline, which will further boost market confidence and drive bank stocks to continue.

3.The favorable policy environment and the continued progress of interest rate liberalization reform will increase the competitiveness and earnings prospects of the banking sector, and promote the continued strength of bank stocks.

4.Funds continue to flow in, if structural funds and institutional funds continue to increase bank stocks, it will give bank stocks a strong momentum.

However, if the downward pressure on the economy increases in the future, the non-performing loan ratio stops falling and rises, the interest rate reform progresses slowly, and funds flow out of bank stocks, this will form a negative and make bank stocks face the risk of adjustment or even **. Therefore, investors still need to carefully judge the macro environment, closely track economic and financial policy trends, and choose the appropriate time to enter bank stocks.

To sum up, if the economic environment continues to improve and the relevant policy favorable factors continue to ferment, there is still a lot of room for bank stocks in A-shares. However, the deterioration of the macro environment will increase the downside risk of bank stocks, and investors need to assess the situation and rationally make a layout.