The Zhitong Finance App learned that GF Securities released a research report stating that Hong Kong's capital market reform continues to optimize the three dimensions of supervision, listing system and settlement mechanism after listing, and the Hong Kong Stock Exchange plans to promote T+1 settlement in the second half of 2028. Looking at the medium to long term, a downward channel for debt costs has been established, the interest rate spread improvement logic continues to be strengthened, and the allocation value of the insurance sector has been highlighted. The short term is being suppressed by expectations from the three-quarter report, but the current low positions of undervalued superimposed institutions have room for valuation repair. It is recommended to focus on allocation opportunities in the brokerage and insurance sectors.
The main views of GF Securities are as follows:
Securities: Hong Kong's capital market reform continues to advance, and post-listing supervision, listing systems and settlement mechanisms are optimized in multiple dimensions
The average daily turnover of the Shanghai and Shenzhen markets this week was 1.58 trillion yuan (-12.7% month-on-month), and the balance of the Shanghai and Shenzhen finance loans was 2.50 trillion yuan (-2.8% month-on-month). In terms of policy, on October 12, the Hong Kong Securities Regulatory Commission announced the consultation summary on the amendments to the “Securities and Futures (Stock Market Listing) Rules”. The intention is to allow the imposition of conditions that can continue to be applied to listing applicants and to apply post-market conditions to listed issuers as an alternative to immediate suspension of trading, while simplifying the resumption of trading procedures. The relevant revisions are expected to take effect in the first quarter of 2027.
In addition, on September 21, the Hong Kong Stock Exchange issued a consultation document for the second phase of the review of the competitiveness of the listing system. The consultation period ends on November 30; on October 16, the Hong Kong Stock Exchange further announced the consultation summary and implementation road map for shortening the settlement cycle in the Hong Kong stock spot market, with the goal of promoting T+1 settlement in the second half of 2028. The above measures are expected to enhance the flexibility of the listing system, improve post-listing supervision, and promote market settlement infrastructure upgrades. Related changes may affect brokers' IPOs and listed company services, financial advisory services, and brokerage clearing systems and operating processes. It is recommended to focus on CITIC Securities (AH), China Merchants Securities (AH), CICC (H), Huatai Securities (AH), Cathay Pacific Haitong (AH), Caitong Securities, Orient Securities, etc.
Insurance: The market continues to adjust, and the three-quarter reporting window is approaching. The short-term performance of insurers may be pressured by market fluctuations. It is recommended to focus on sector allocation opportunities as performance pressure releases
According to iFind data, as of October 16, the CITIC II Insurance Index fell by 2.94% in a single week, outperforming the Shanghai and Shenzhen 300 Index (down 3.40% this week). Sectors represented by technology and the like continued to adjust this week, and the insurance sector was under short-term pressure due to factors such as the suppression of expectations in the three-quarter report. Considering the sector's current undervaluation and prominent safe-haven attributes, superposition institutional holdings are still low. Against the backdrop of continued market turbulence, it is expected that the sector has some room for valuation repair. It is recommended to focus on sector opportunities. On the policy side, the supervisory authorities recently issued a “Notice on Launching Investigation and Rectification of “Quick Return” Products, which mainly targets the risk of “paying 3 insurances 6” (3 years of payment, 6 years of insurance period), etc., and requires that, in principle, no new reports of products with a cash value exceeding the premiums already paid in the 3rd policy year or similar products in stock should be actively discontinued to curb the risk of deliberate cost reduction assumptions, inconsistent reporting, and potential cost differences. The industry is currently at a critical point in preparing for a “good start” in 2027. In order to “cool down” the scale rush behavior with short-term payback as the selling point, it is expected to guide the channel from scale-oriented to long-term contract, dividend insurance and guaranteed products.
Looking ahead, the disclosure window for the third quarterly report is approaching. Considering the overall adjustment of the equity market in the third quarter, insurers' investment income may be dragged down to a certain extent, and profit side performance may be pressured, but the release of performance pressure is expected to provide a better allocation point for the sector — the market's cautious expectations for the third quarterly report have been priced in pre-holiday adjustments, and the undervaluation of the sector will further highlight the margin of safety; in addition, on the debt side, it is expected that listed insurance companies will start a “good start” one after another. Under the trend of long-term savings product migration, new order sales are expected to hit the market Block formation continues to catalyze. Looking at the medium to long term, a downward channel for debt costs has been established, the interest rate spread improvement logic continues to be strengthened, and sector allocation value is prominent. Currently, sector valuations are still low, and individual stocks suggest focusing on: China Life Insurance (AH), China Insurance (AH), China Financial Insurance (H), China Taiping (H), China Insurance (A) /China People's Insurance Group (H), and China Taibao (AH).
Risk warning: sharp fluctuations in the capital market, increased industry competition, changes in industry policies, etc.