Open source securities: Financial combination boxing policy exceeded expectations, high beta non-bank sector resilience outstanding.

Open Source Securities released a research report stating that the valuation and institutional holdings of the securities sector are at historical lows, with performance growth reaching a bottom, and bullish on the rebound in the sector. The report recommends internet securities and financial IT targets with high trading volume sensitivity and large adjustment ranges this year, benefiting from targets such as Hithink RoyalFlush Information Network (300033.SZ); recommends merger themes, benefiting targets such as China Galaxy (601881.SH); recommends Orient (600958.SH) with outstanding advantage in wealth management business. In addition, the liability side of the insurance industry continues to be prosperous, with assets benefiting from the rise in equity markets and outstanding profit elasticity. Recommended targets include China Pacific Insurance (601601.SH) and New China Life Insurance (601336.SH). The report also looks favorably upon the diversified financial sector benefiting from the Fed rate cuts and increased activity in the Hong Kong stock market, such as HKEX (00388), and Jiangsu Financial Leasing (600901.SH) that is well-prepared for cycle turns. Furthermore, attention is given to the long-term undervaluation of state-owned financial holding platforms in the diversified financial sector. The main points of the Open Source Securities report are as follows: Event: On September 24th, the State Council Information Office held a press conference where the central bank, CBIRC, and CSRC announced a series of policies. Series of policies exceeded expectations, regulatory support for the capital market is clear 1. Monetary policy and real estate: (1) The central bank announced a recent 50BP reserve requirement ratio cut, and a 20BP reduction in the 7-day reverse repurchase operation rate. (2) Guiding the average down by 50BP mortgage rates, conducive to reducing household mortgage interest expenditures and promoting consumer expansion and investment. The minimum down payment ratio for second home loans nationwide has been lowered from the current 25% to 15%, and the support ratio for refinancing affordable housing has been increased from 60% to 100%. 2. Capital Market: (1) Creating a convenient exchange between securities, funds, and insurance companies to support eligible companies to obtain liquidity from the central bank through asset pledging, significantly enhancing funding and equity holding capabilities. (2) Establishing stock repurchase financing to guide commercial banks to provide loans to listed companies and major shareholders for stock repurchases, with a loan interest rate of 2.25%, an initial 300 billion, and possible future additions. The above tools will inject incremental funds into the market, reflect regulators' importance to the capital market, and are expected to boost investor confidence and improve risk appetite. Market policy introduces incremental funds which help improve risk appetite, bullish on the rebound in the non-banking sector The series of policies this time exceeded expectations, helping to boost market investor confidence and increase market activity, benefiting undervalued high beta non-banking sectors. Investment advice: (1) Securities: The valuation and institutional holdings of the sector are at historical lows, with performance growth reaching a bottom, bullish on the rebound in the sector. Recommended targets include internet securities and financial IT targets with high trading volume sensitivity and large adjustment ranges this year, benefiting from targets such as Hithink RoyalFlush Information Network, East Money Information, Beijing Compass Technology Development; recommends merger themes, benefiting targets such as China Galaxy, Zheshang; recommends Orient with outstanding advantage in wealth management business. (2) Insurance: The prosperity of the liability side continues, assets benefit from the rise in equity markets with outstanding profit elasticity, recommended targets include China Pacific Insurance, China Life Insurance, Ping An Insurance; benefiting targets include New China Life Insurance. (3) Diversified finance: Bullish on beneficiaries of the Fed rate cuts and increased activity in the Hong Kong stock market, such as HKEX, bullish on Jiangsu Financial Leasing well-prepared for cycle turns. Additionally, pay attention to the long-term undervaluation of state-owned financial holding platforms in the diversified financial sector. Risk warning: Policy implementation time and effectiveness may fall short of expectations; increased industry competition may lead to lower-than-expected profits.