Date of Report: September 26, 2024
Broker: CGS International Securities
CCB Overview
China Construction Bank (CCB) is one of the top picks recommended by analysts in the banking sector. CCB is expected to benefit from the recent policy developments in China, particularly following the latest Politburo meeting and the policy package announced in late September 2024.
Positive Policy Momentum
The unscheduled Politburo meeting held on September 26, 2024, signals an acceleration in China’s policy support to counteract the country’s broad economic slowdown. Following this meeting, there is expected to be a ramp-up in fiscal, property, and consumption policies, which are likely to boost the banking sector. Specifically, large state-owned banks such as CCB stand to gain due to the plan to replenish core tier-one capital. This injection of capital is part of a broader initiative aimed at sustaining growth in the Chinese economy and strengthening key financial institutions like CCB.
Benefits from Policy Measures
The report highlights that CCB is among the leading beneficiaries of the recent policy momentum aimed at supporting the stock market and economic recovery. The reduction in policy rates, the reserve requirement ratio (RRR), and adjustments in mortgage policies are expected to create favorable conditions for CCB’s growth.
Additionally, support for mergers and acquisitions within the capital markets, alongside efforts to attract medium- and long-term funds, will potentially further bolster CCB’s financial stability and enhance its performance in the coming months.
Sector Outlook
The broader banking sector is set to benefit from the recent policy package, which aims to provide robust financial support through capital injections and improved lending conditions. CCB’s strong position as a state-owned bank aligns with the government’s objectives of financial stability and growth, making it a key player in the Chinese financial landscape.
Conclusion
CCB is highlighted as a high-conviction pick in the banking sector due to the anticipated benefits from China’s policy support measures. The bank’s involvement in large-scale financial initiatives positions it well for continued growth and resilience in the current economic environment. The September 26, 2024, report by CGS International Securities underscores CCB’s role in benefiting from the forthcoming policy implementations.
