On October 21, the Wind financial index rose 1.84%, and the real estate index rose 2.68%. In the context of the overall downturn in the A-share market, and individual stocks fell more and rose less, these two major sectors played an important supporting role. With the release of some positive signals, market expectations regarding financial and real estate valuation corrections have gradually increased, and the opportunity to repair low valuations may be approaching.

In fact, in terms of valuation alone, the current financial index’s price-to-earnings ratio is only 7.34 times, and the price-to-book ratio is only 0.86 times. Among them, Minsheng Bank’s price-earnings ratio is as low as 3.3 times, the price-to-book ratio is only 0.36 times; the price-earnings ratio of the real estate index is only 5.51 times, and the price-to-book ratio is only 0.9 times. In contrast, the price-to-earnings ratio of the Wind All A Index is as high as 19.28 times, and the price-to-book ratio is 2.02 times.

In history, the valuations of the two major sectors of finance and real estate have been low for a long time, but such a low position is rare. There are two main reasons for this: 1. It is the two major sectors that have been responsible for the development of the macro economy for a long time. When the economic development is expected to improve, the valuation of these two major sectors will have the motivation to increase. However, since the first half of the year, market expectations for the economy have declined. Second, since the beginning of this year, real estate regulation has become increasingly strict, and individual real estate companies have exploded as a result, causing the entire real estate sector to be under pressure. In addition, due to the many business transactions between finance and real estate, worries about bad debts caused by real estate companies’ thunderstorms have also caused the valuation of the financial sector (mainly banking and insurance) to decline.

However, recently financial real estate has ushered in three major valuation restoration opportunities. First, Vice Premier Liu He recently stated that there are individual problems in the real estate market, but the overall risk is controllable, reasonable funding needs are being met, and the overall situation of the healthy development of the real estate market will not change. Perhaps because of this certain adjustment, Ping An of China, which has been suppressed by real estate risks, ushered in a retaliatory rebound on Thursday. The second is the appreciation of the renminbi. On October 19, the U.S. dollar soared 500 points against the offshore renminbi in a single day, breaking the 6.4 mark in one fell swoop. In the context of the appreciation of the local currency, outstanding listed company equity, real estate (including REITs) and national debt are usually sought after by funds. From the perspective of the secondary market, foreign investors have bought 18 billion yuan of A shares for three consecutive trading days. On Thursday, foreign investors bought Ping An of China 1.02 billion yuan and China Merchants Bank 670 million yuan. Third, recent positive news about real estate development and house purchase loans continue to appear. The market may tend to believe that the most severe time for real estate deleveraging has passed, and even if there will be individual crises in the future, the pace and methods of disposal will also tend to be calm.

Of course, in the long run, the valuation logic of financial real estate is not perfect, and future trends still need to be cautious. First of all, with the recentThe bond yield rebounded, and the pressure on the asset side of insurance companies was eased. However, the total premium income of the seven listed insurance companies in September was only 215.107 billion yuan, a decrease of 4.27% year-on-year. The insurance industry is still under great pressure on the liability side. Secondly, the current market generally expects that now to the first half of next year, there is a high probability that the global economic growth rate will decline. Whether the ultra-low valuation of the banking sector fully reflects this expectation is still a question mark. Third, the recent positive news does help the valuation restoration of the real estate sector, but in the long run, the real estate policy tone has not fundamentally changed. The possibility of substantial credit widening in the real estate sector is still low, and the trend of real estate deleveraging is expected. Will continue.

(Original title: Financial Real Estate Valuation Repair and OK and Cherish)