"14 Market Value Management Policies" policy is favorable for stocks trading below book value. The market expects the valuation of bank stocks to be reshaped.

As of today, data from Wind shows that out of the 42 listed banks in A-share market, 39 have been in a long-term state of being below par value. In response to the long-term underperformance of listed companies, the China Securities Regulatory Commission issued guidelines on market value management last Friday, specifying that companies should formulate plans to enhance their value and provide special explanations on the execution of these plans during annual performance briefings. Today, driven by policies, underperforming stocks have strengthened across the board, with the banking sector leading the gains. Bank Of Zhengzhou surged by 10.24%, China Minsheng Banking Corp., Ltd., Qingdao Rural Commercial Bank Corporation, Jiangsu Zijin Rural Commercial Bank, and others saw gains of over 5%. Industry insiders point out that from a macroeconomic perspective, a massive reduction in debt has significantly alleviated the risks of city construction investment, and the improvement in asset quality risks will support the mid to long-term valuation recovery of banks. In terms of news, the issuance of guidelines on market value management by the China Securities Regulatory Commission is also expected to provide an opportunity for revaluation in the banking sector. Banking sector sees significant gains as undervalued stocks strengthen From a news perspective, on November 15, the China Securities Regulatory Commission issued the "Guidelines for Listed Companies Supervision No. 10 - Market Value Management," which emphasizes that listed companies should focus on their core business, enhance operational efficiency and profitability, and, based on their own circumstances, promote investment value reflection through mergers and reorganizations, equity incentives, employee stock ownership plans, cash dividends, etc. For companies that have been underperforming for a long time, they should formulate a plan for enhancing their market value. Companies that have long been below the industry average price-to-book ratio should provide specific explanations on the execution of their value enhancement plan during annual performance briefings. Driven by policy catalysts, today's trading session saw gains in the banking sector, with Bank Of Zhengzhou hitting the limit up, and China Minsheng Banking Corp., Ltd., Hua Xia Bank, Bank Of Guiyang, Xiamen Bank Co., Ltd., China Everbright Bank, and others following suit. Yang Delong, General Manager of Qianhai Kaiyuan Fund, told Caijing Network reporters that today's market rebound is largely driven by policy benefits. "The 'Market Value Management' guideline is conducive to improving the management level of listed company market value, which is positive for dividend stability assets and heavily undervalued large-cap stocks. After the change in policy direction, market investment confidence has also increased." Dongguan Securities stated that the banking sector is entirely in an undervalued state, and the "Market Value Management" guideline is expected to bring an opportunity for revaluation in the banking sector. "Since the implementation of the new policy on September 24, the rate of increase in undervalued central and state-owned enterprise stocks has been relatively slow. The release of this new document is expected to inject new upward momentum into a wide range of undervalued sectors, including banks." Dongguan Securities analyst Wu Xiaotong said. "At present, more than 90% of listed companies in the banking sector are below par, and attention should be paid to opportunities for market value enhancement and value return." EB SECURITIES pointed out that from the beginning of the year when the State-owned Assets Supervision and Administration Commission of the State Council "fully pushed forward the assessment of market value management of listed companies," to April when the first "Nine New State-Owned Enterprises Regulations" proposed "encouraging listed companies to establish a market value management system," and to the formal release of the "Guidelines" by the China Securities Regulatory Commission at the end of the year, it has opened the "reputable year" of market value management in the A-share market. Improvement in asset quality enhances bank stock valuation In recent days, since Finance Minister Liao Fa'an announced a plan exceeding 10 trillion yuan for debt-to-equity swaps, many local governments are accelerating the issuance of new bonds to replace existing hidden debts. Industry experts believe that the previous risks associated with city investment platforms were a significant factor in the low valuation of financial sectors such as banks, and in the future, with the progress of debt-to-equity swaps and asset risk recovery, bank stock valuations are expected to rise. Yin Jianfeng, Chief Economist of China Zheshang Bank, once stated that some local government investment platforms have defaulted on debts, which is also an important reason why the valuation of financial sectors like banks has been stagnant at a low point. With the progress of large-scale debt-to-equity swaps, the quality of loans and bonds held by domestic commercial banks related to local hidden debts is expected to further improve, the operating fundamentals are expected to be enhanced, and the valuation of the financial sector is expected to recover. "It is worth paying attention to the specific policies supporting debt-to-equity swaps in the future, including policies for refinancing and new financing for local government investment enterprises, as well as measures to optimize the debt structure of these enterprises, lengthen debt maturities, and reduce debt costs." Sun Hao, Senior Director of Public Finance Ratings in the Asia-Pacific region at Fitch Ratings, told Caijing Network reporters. Huatai believes that the "most significant measure to support debt-to-equity swaps in recent years" demonstrates the regulatory sincerity in addressing city investment risks. Currently, with central support for debt restructuring, banks in key regions of debt restructuring are expected to benefit from anticipated improvements, driving valuation recovery. In the medium to long term, as the economy steadily recovers and risk preferences increase, stock selection in banks will gradually return to fundamental logic, increasing the premium space for the valuations of high-quality banks. The performance growth of the Jiangsu-Zhejiang high-quality regional industry is expected to continue leading, while the strategic upgrade in western regions also brings new opportunities for local banks. This article is reprinted from "Caijing Network," GMTEight Editor: Xu Wenqiang.