Bank stocks in the A-share market have re-entered my field of vision in recent years. In my spare time, I often ponder issues related to the A-share banking sector.
For instance, the China Securities Regulatory Commission (CSRC) recently issued new regulations on shareholding reduction in the A-share market. The new rules set requirements for shareholding reduction in the event of a net asset value break, an issue price break, and dividend distribution. If these new rules are followed, controlling shareholders, actual controllers, or the largest shareholders of listed banks will collectively face restrictions on share reduction.
According to this regulation, as of the closing on August 28th, there are 41 A-share listed banks with a net asset value break and 12 with an issue price break; under the new rules, it is expected that listed banks will generally not be able to meet the restrictions of not having a net asset value break or an issue price break. In other words, the essence of this new rule is to limit the share reduction of major shareholders in the banking sector.
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In fact, most of the major shareholders or actual controllers of bank stocks are the State-owned Assets Supervision and Administration Commission (SASAC). State-owned assets certainly do not have the need for share reduction now, especially not at low prices. I believe it is possible that banks may significantly increase their holdings of their own stocks in the future.
The CSRC also mentioned: "Further promote the construction of a valuation system with Chinese characteristics. Highlight the support for the excellent and the restriction of the inferior, study the appropriate restriction of financing activities for listed companies and industries that are below the issue price or net asset value, and require them to propose plans to improve market value."
This regulation is also a restriction on the financing of bank stocks. So, do bank stocks have the need for financing? Of course, bank stocks do!
Under such a system arrangement, the A-share banking sector either completely gives up the idea of share reduction and financing or finds ways to increase its stock price to meet the conditions for share reduction and financing. It is clear that increasing its stock price to meet the conditions for share reduction and financing is the only way out for the A-share banking sector.
At the end of last year, the management proposed the issue of a valuation system with Chinese characteristics, which is to improve the valuation of state-owned enterprises led by the banking sector. I think the banking sector will eventually submit plans to improve market value, and plans such as repurchase, increase in holdings, and increase in dividends may be submitted. In short, state-owned enterprise stocks led by the banking sector may have a significant increase in the future, and this increase is very likely to double. Because if the price of bank stocks wants to return to net assets, the stock price must double.If the banking and other large-cap sectors experience a surge, then the A-share market will easily break through the 4000-point mark, thereby initiating a super bull market. The problem is that we cannot know in advance which year the state-owned enterprise sector, led by banks, will soar. Therefore, the best investment strategy at present is to stick to the banking sector at a low price, focusing on dividends before the market takes off. At least this will not lead to investment losses due to misjudgment. This is defense.
Once the banking sector soars in the future, our heavy position in the banking sector may yield excessive investment returns. This is defense with an offensive.
A fan pointed out that I mentioned the Beijing Stock Exchange had good news at the beginning of this year, but the North Index has been falling since the beginning of this year. His meaning is: "The good news you mentioned is meaningless, it will still fall if it should."
Here I need to clarify a bit:
I don't have a golden finger, nor am I a golden-tongued orator. I didn't say that whoever is good will definitely rise, nor do I have the magical ability to make whoever I favor rise immediately. My optimism about the North Index is that, with the support of good news, there is a high probability of a good future. As for which month or year it will soar, I definitely don't know. If I knew when the North Index would soar, I would have sold the two houses at home and bought the North Index with all my money.
As humans, the stock and fund investments we make cannot guarantee that every decision will be rewarded. However, as long as we persist in doing things that have a high probability and high odds of making money in the long run, "good luck" will come sooner or later, and we will have a great opportunity to obtain substantial investment returns. Investment is originally a game of the product of probability and odds.
The current concept of the Chinese special valuation sector that I am optimistic about also cannot guarantee a 100% rise in the future, let alone a rise in the next few months. There is no 100% certainty in the investment world, only how much risk we are willing to take for the uncertainty of the future.
For example, I am optimistic about the Chinese special valuation sector, and in order to fight for a big rise, I have a total asset of 100,000 yuan, and I am willing to take out 20,000 yuan to bear the corresponding risk and buy the banking sector. I have estimated in advance how much my maximum potential loss is, how much the maximum return is, and whether the probability of success is high, and finally believe it is worth taking this risk. Then, according to my own bearing capacity, I invested 20,000 yuan.
Is this thinking mode similar to opening a small grocery store or restaurant? This is stock and fund investment, and there is no essential difference from physical investment. Both require taking certain risks to obtain profits. Don't think that the risk of physical investment is unpredictable, and there is a foolproof method for stocks and funds. Reiterate once again, investment is just a game of probability and odds. Each investment is aimed at a high probability and high odds, which is the correct investment. As for the result - that is not something we investors can control.
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