Investment Rating - The industry investment rating is "Overweight" (maintained) [1] Core Viewpoints - The non-bank financial sector has experienced an excess decline compared to the overall A-share index since late August, with valuations and institutional holdings at low levels. The brokerage sector shows good performance prospects, while the insurance sector has certain dividend attributes. The non-bank financial sector is seen as having both offensive and defensive characteristics, and there are strategic opportunities for investment in the brokerage sector, particularly in undervalued life insurance stocks and high dividend yield companies like Jiangsu Jinzu [5] Summary by Sections Brokerage Sector - The average daily trading volume of stock funds reached 3.19 trillion yuan, up 15.9% month-on-month. In September, 2.94 million new A-share accounts were opened, a year-on-year increase of 61% and a month-on-month increase of 11%. The total number of new accounts opened from January to September reached 20.15 million, up 50% year-on-year [6] - The adjustment of margin financing collateral ratios is a routine measure and primarily affects new financing scales without impacting existing stock. The brokerage sector's performance in Q3 is expected to show a year-on-year growth of 53.1% in net profit attributable to the parent company, with a quarter-on-quarter increase of 1% [6] - The report recommends three main lines of brokerage stocks: Guosen Securities, which benefits from retail advantages and the Hainan cross-border asset management pilot; Huatai Securities and CICC, which excel in overseas and institutional business; and GF Securities and Dongfang Securities H, which have significant wealth management advantages [6] Insurance Sector - The implementation of the "reporting and operation integration" policy for non-auto insurance business is expected to lead to a decline in the comprehensive cost ratio (COR) for property insurance companies. The regulatory measures are anticipated to guide the industry towards more standardized development and lower insurance rates [7] - Long-term interest rates remain stable, alleviating net asset pressures, while the expected return on equity assets is boosted, leading to a potential improvement in the interest margin for insurance companies in the medium to long term. The report recommends undervalued stocks such as China Pacific Insurance and Ping An Insurance [7] Recommended and Beneficiary Stocks - Recommended stocks include Huatai Securities, GF Securities, Guosen Securities, Dongfang Securities H, CICC H, Dongfang Caifu, Guotai Junan; China Pacific Insurance, Ping An Insurance; Jiangsu Jinzu, Hong Kong Stock Exchange [8]

Core Viewpoint - The adjustment of margin trading collateral ratios for SMIC and BAWI Storage is seen as a positive development, potentially alleviating recent stock price declines for these companies [2][3]. Group 1: Margin Trading Adjustments - The margin trading collateral ratios for SMIC and BAWI Storage have been raised from 0% to 70% and 50%, respectively [3][5]. - The recent drop in stock prices for SMIC and BAWI Storage was influenced by the previous 0% collateral ratio, with maximum declines of over 18% and 17% in the last two trading days [3][5]. - Other stocks, including XianDao Intelligent, Nanji Light, and Mannester, also saw their collateral ratios adjusted from 0% to between 30% and 65% [5]. Group 2: Market Reactions and Future Expectations - The static price-earnings ratio for SMIC has returned to around 235 times, prompting expectations that more brokerages will adjust its collateral ratio [12]. - The adjustment of collateral ratios to 0% typically occurs under three conditions: excessively high static P/E ratios, stocks under risk warnings or delisting, and dynamic adjustments by brokerages based on risk management [14].

Market Overview - The A-share market experienced narrow fluctuations on October 10, with the ChiNext Index and the Sci-Tech 50 Index showing significant adjustments during the session. The Shanghai Composite Index fell by 0.51%, the Shenzhen Component Index dropped by 1.85%, and the ChiNext Index decreased by 3.40% [1][4]. Margin Trading - As of October 9, the margin trading balance in the Shanghai, Shenzhen, and North markets reached a historical high of 24,455 billion yuan, with a single-day increase of approximately 514 billion yuan, marking the second-highest single-day growth on record since October 8, 2024 [2][3]. - The financing balance also hit a record high of 24,292 billion yuan, with a single-day increase of about 508 billion yuan, which is the second-highest single-day growth level recorded [3]. Sector Performance - The Sci-Tech 50 Index saw a decline of over 4% during the session, following a recent four-year high. Notable declines were observed in stocks such as Jinghe Integrated, which fell by over 11%, and other stocks like Baiwei Storage and SMIC also led the downturn [5]. - In terms of sector performance, the building materials, textile and apparel, coal, and beauty care sectors showed gains, while the power equipment, electronics, and computer sectors experienced declines [5]. New Listings - A new stock, Aomeisen, was listed today, with its price surging over 380% during the session. Aomeisen specializes in intelligent equipment manufacturing, focusing on the research, design, production, and sales of smart production equipment and lines, applicable across various industries including electrical appliances and renewable energy [6].

Core Viewpoint - The A-share market experienced a narrow fluctuation on October 10, 2023, with significant adjustments in the ChiNext and Sci-Tech 50 indices, leading to declines in major indices [1][5]. Margin Trading Scale - As of October 9, 2023, the margin trading balance in the Shanghai, Shenzhen, and North markets reached 24,455 billion, setting a new historical high. The single-day increase on October 9 was approximately 514 billion, marking the second highest single-day growth in history [3][4]. - The financing balance also reached a record high of 24,292 billion, with a single-day increase of about 508 billion on October 9, which is the second highest level recorded [4]. Index Performance - The ChiNext index saw a decline of over 3% during the session, with stocks like XianDao Intelligent dropping more than 14% [6]. - The Sci-Tech 50 index experienced a more significant drop, exceeding 4% at one point, following a recent peak that marked a four-year high [7][8]. Stock Adjustments - Several brokerage firms adjusted the margin trading collateral ratio for multiple stocks, including SMIC, to 0, based on exchange regulations regarding risk warnings and financial metrics [9]. Sector Performance - In terms of sector performance, the building materials, textile and apparel, coal, and beauty care sectors saw gains, while the power equipment, electronics, and computer sectors faced declines [10]. New Stock Listing - A new stock, Aomeisen, was listed on the market, with its price surging over 380% during the session. The company specializes in intelligent equipment manufacturing, focusing on smart production devices and lines applicable across various industries [11][12].

Core Viewpoint - The adjustment of the financing and securities lending ratio for SMIC and other stocks to zero is a regulatory measure based on specific criteria, including high static P/E ratios and risk warnings [1][2][3]. Group 1: Stock Adjustments - Starting from October 9, the financing and securities lending ratio for SMIC was adjusted from 0.70 to 0, a trend observed across multiple brokerage firms [1]. - Other stocks, such as BAWI Storage, also had their financing ratios adjusted to zero, indicating a broader regulatory action affecting several stocks [1]. - The adjustment to zero is typically applied to stocks with a static P/E ratio exceeding 300, stocks under risk warning (ST or *ST), or those with a net asset value per share below 1 yuan [2][3]. Group 2: Regulatory Framework - The adjustments are in accordance with regulations set by the stock exchanges, which specify that stocks under risk warning or with a static P/E ratio above 300 should have a financing ratio of 0% [3]. - The recent increase in stock prices for certain companies, including SMIC, has led to static P/E ratios exceeding 300, prompting these adjustments [3]. - As of October 9, over 200 stocks in the A-share market had static P/E ratios above 300, with SMIC's latest static P/E ratio reported at approximately 302 [3].

Core Viewpoint - The adjustment of margin financing rates for certain stocks, including SMIC, to zero is a result of new regulations from the Shanghai and Shenzhen Stock Exchanges, which state that stocks with a static P/E ratio above 300 or negative earnings will have a margin financing rate of zero [1][3]. Group 1: Regulatory Changes - The Shanghai and Shenzhen Stock Exchanges revised the "Margin Financing and Securities Lending Implementation Rules" in 2023, specifying that stocks with a static P/E ratio over 300 or negative earnings will have a margin financing rate of 0% [3]. - As of September 30, 2023, SMIC's static P/E ratio exceeded 300, leading to the adjustment of its A-share margin financing rate to zero [1][3]. Group 2: Impact on Investors - Investors holding stocks with a margin financing rate reduced to zero may face challenges in continuing margin trading, as they might need to provide additional collateral or liquidate some assets to maintain their margin requirements [3][4]. - A representative from a leading brokerage indicated that existing positions would not be forcibly liquidated due to the zero rate, but new positions cannot be opened until the rate changes [4]. Group 3: Comparison with Hong Kong Market - In contrast to the A-share market, the Hong Kong market allows brokers to set their own margin financing rates, which can vary significantly between different brokers [4][7]. - Stocks in the Hong Kong market, even with a static P/E ratio above 300, such as Huahong Semiconductor, can still be used as collateral for financing, with initial margin rates ranging from 50% to 60% [7][8].

Core Viewpoint - SMIC, a leading stock on the STAR Market, has encountered a sudden situation where its A-share margin financing ratio has been adjusted to zero by several major brokerages due to its static price-to-earnings (P/E) ratio exceeding 300 times as of September 30, 2023 [1][4]. Group 1: Margin Financing Adjustments - Major brokerages including CITIC Securities, Guotai Junan, and Huatai Securities have set SMIC's A-share margin financing ratio to zero, following the revised rules from the Shanghai and Shenzhen Stock Exchanges [1][3]. - The adjustment is based on the 2023 revised "Implementation Rules for Margin Financing and Securities Lending Transactions," which stipulates that A-shares with a static P/E ratio above 300 or negative values have a margin financing ratio of zero [4][5]. - Prior to this adjustment, SMIC's A-share margin financing ratio was 70% at Guotai Junan [3]. Group 2: Comparison with Hong Kong Market - In contrast to the A-share market, the Hong Kong market allows brokerages to set their own margin financing ratios, leading to a more flexible environment where SMIC's Hong Kong shares currently have a financing ratio of around 50% [1][6]. - The static P/E ratio for SMIC's Hong Kong shares is 175 times, which does not trigger a reduction in the financing ratio under the current rules [8]. - Other stocks with static P/E ratios exceeding 300 in the Hong Kong market, such as Hua Hong Semiconductor, still qualify for margin financing, indicating a disparity in regulatory approaches between the two markets [10][12]. Group 3: Investor Implications - Investors holding SMIC shares will not be forced to liquidate their positions due to the zero financing ratio, but they may face challenges in opening new positions or obtaining additional financing [5][4]. - If investors' maintenance margin ratio falls below 130%, they may be required to deposit additional collateral or liquidate some assets to maintain their positions [4][5].

Core Viewpoint - SMIC, a leading stock on the STAR Market, has encountered a sudden situation where its A-share margin financing rate has been adjusted to zero by several major brokerages due to its static P/E ratio exceeding 300 times [1][2][3]. Group 1: Margin Financing Rate Adjustment - The margin financing rate for SMIC's A-shares has been reduced to zero across multiple brokerages, including CITIC Securities, Guotai Junan, and Huatai Securities [1][2]. - Prior to this adjustment, SMIC's A-share margin financing rate was 70% at Guotai Junan [2]. - Other stocks, such as Mannesmann and Yongding Co., also saw their margin financing rates adjusted to zero [2]. Group 2: Regulatory Background - The adjustment is based on the revised "Implementation Rules for Margin Financing and Securities Lending Transactions" by the Shanghai and Shenzhen Stock Exchanges, which states that stocks with a static P/E ratio over 300 or negative P/E will have a margin financing rate of 0% [3]. - As of September 30, SMIC's static P/E ratio was reported to be just over 300, leading to this adjustment [3]. Group 3: Impact on Investors - Investors holding stocks with a margin financing rate reduced to zero may face challenges in continuing margin trading, as they might need to provide additional collateral or liquidate some assets to maintain their margin requirements [3][4]. - However, existing positions are not immediately affected, and investors can still hold their stocks without being forced to liquidate [4]. Group 4: Comparison with Hong Kong Market - In contrast to the A-share market, the Hong Kong market allows for more flexibility in margin financing rates, which are determined by individual brokerages and can be adjusted dynamically [4]. - For instance, SMIC's Hong Kong shares currently have a margin financing rate of around 50%, despite its high static P/E ratio of 175 [5][7].

Core Viewpoint - Semiconductor Manufacturing International Corporation (SMIC) has faced a sudden situation where its A-share margin financing ratio has been adjusted to zero by major brokerages due to its static price-to-earnings (P/E) ratio exceeding 300 times, as per the revised rules of the Shanghai and Shenzhen Stock Exchanges [1][2] Group 1: Impact on SMIC - As of September 30, SMIC's static P/E ratio was just over 300, leading to the adjustment of its A-share margin financing ratio to zero by brokerages like CITIC Securities and Guotai Junan [1][2] - Prior to this adjustment, SMIC's A-share margin financing ratio was 70% at Guotai Junan [1] - Other stocks, such as Bawei Storage, also had their margin financing ratios adjusted to zero due to similar P/E ratio conditions [2] Group 2: Market Regulations - The Shanghai Stock Exchange's revised margin financing rules state that A-shares with a static P/E ratio above 300 or negative values will have a margin financing ratio of 0% [2] - The static P/E ratio is calculated based on the stock's closing price and the audited earnings per share from the most recent fiscal year [2] Group 3: Investor Implications - Investors holding stocks with a margin financing ratio reduced to zero may need to provide additional collateral or liquidate some assets to continue financing [3] - Existing positions are generally not forced to be liquidated, but new positions cannot be opened until the margin financing ratio changes [3] Group 4: Comparison with Hong Kong Market - The Hong Kong market has a more flexible approach, allowing brokerages to set their own margin financing ratios without strict rules on high P/E ratios or losses [4][5] - SMIC's Hong Kong shares currently have a margin financing ratio of around 50%, despite its static P/E ratio being 175 times [5] - Other stocks with high P/E ratios in the Hong Kong market, such as Hua Hong Semiconductor, can still be used as collateral for financing [5]