摩根士丹利：中国信贷风险周期中的最大拖累已在2024年触底

Investment Rating - The report assigns an "Attractive" investment rating to the financial industry in China, highlighting a positive outlook for specific companies such as Ping An Insurance-H, AIA Insurance, Hong Kong Exchanges, Ningbo Bank, Minsheng Bank-H, and China Merchants Bank-H [5]. Core Insights - The report suggests that the most challenging period for local government financing structure adjustments may have passed, with local government leverage expected to slow down, leading to a balance of short-term and long-term risks [1][3]. - It is believed that local government financing has likely bottomed out in the first half of 2024, following necessary adjustments over the past few years, which were crucial for addressing risks associated with local government financing and related sectors [1][26]. - The new financing structure is seen as more sustainable, balancing short-term and long-term risks, with stricter controls on low-quality local government financing platform debts leading to a shift towards higher productivity projects [2][28]. Summary by Sections Local Government Financing - Local government financing and related risks are believed to have bottomed out in the first half of 2024, with a significant reduction in land sale revenues and local government platform debts [1][27]. - The report estimates that local government financing from land sales and platform debts peaked at approximately RMB 16 trillion in 2020, contributing to significant risks in the real estate sector [26][24]. - The decline in land sale revenues in the first half of 2024 was substantial, dropping to RMB 1.53 trillion compared to RMB 3-6 trillion in previous years [27]. Debt Management and Sustainability - The interest expenses of local governments have decreased significantly, from RMB 1.7 trillion in 2021 to RMB 1.2 trillion, improving the sustainability of local government debt [2][29]. - The report anticipates that the net interest burden from infrastructure debt as a percentage of GDP may decrease from 0.9% to 0.8% over the next five years, indicating a more sustainable development outlook [2][21]. - The restructuring of local government debt towards bonds is expected to reduce uncertainty in the financial system and enhance market stability [29]. Financial Sector Outlook - The improvement in local government financing is expected to support a revaluation of Chinese financial stocks, with potential price increases of 30-40% for covered banks [3][36]. - The report highlights that the stabilization of local government financing can alleviate peripheral risks associated with credit in various sectors, including industrial and retail [35]. - The anticipated adjustments in the credit cycle are expected to lead to a gradual rebound in bank price-to-book ratios, with a projected increase of 0.1-0.2 times [3][36].