Financial assets have been in four categories for a long time, and are divided into four categories: transactional financial assets, available-for-sale financial assets, holding-to-maturity investments and loans and accounts receivables. The cost of each asset, subsequent measurement, etc. are different. Friends who are in contact for the first time will have headaches.
Financial assets are difficult to understand, and the financial asset standards are constantly being revised. On March 31, 2017, the Ministry of Finance issued the revised accounting standards for financial instruments such as "Company Accounting Standards No. 22 - Confirmation and Measurement of Financial Instruments", "Company Accounting Standards No. 23 - Financial Transfer", "Company Accounting Standards No. 24 - Hedging Accounting" and "Company Accounting Standards No. 37 - List of Financial Instruments". These three are collectively called "New Financial Instruments Standards" or "Chinese Version IFRS9".
New standard, financial assets are divided into financial assets measured at amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income, and financial assets measured at fair value and whose changes are included in current profit and loss. This is completely different from the previous classification, and the division is based on "considering the business model of the company's management of financial assets and the contract cash flow characteristics of financial assets."
In fact, financial assets are not mysterious, but they are bonds, equity, and funds held by listed companies. The difference between various categories lies in the proportion or purpose of equity held by listed companies, and like any other asset, the key lies in the ability of assets to create returns and cash flow.
Considering that many listed companies have not disclosed according to the latest standards, it is difficult to interpret listed companies as an example. We will interpret them according to the original disclosed subjects, which does not affect everyone's understanding.
Section 1 Trading financial assets
1. What are trading financial assets
0 Trading financial assets mainly account for stocks, bonds, funds and other financial assets held for trading purposes, including some financial products. In the new standard, trading financial assets generally correspond to financial assets measured at fair value and their changes are included in the current profit and loss.
Listed companies buy financial products, buy a small amount of stocks that are ready to sell at any time, buy funds, etc., which are all considered trading financial assets. If retail investors include listed companies, the stock investments we buy should be included in our trading financial assets.
For example, many listed companies announced the "Announcement on the Use of Idle Self-owned Funds to Investment in Securities and Financial Management Products", stating that they will use Idle Self-owned Funds to invest in securities and financial management products, so that idle funds can maintain and increase their value on the basis of ensuring security and liquidity. Generally speaking, the subsequent investment of these listed companies may be calculated based on trading financial assets.
So who holds the most financial assets? Of course it is the financial industry, such as banks, insurance, securities, etc.
As of December 31, 2018, the listed company with the most trading financial assets in A shares was Ping An, with a holding amount of up to 824.939 billion yuan, accounting for about 12% of its total assets. In addition, the other nine are banks, but the proportion of total assets is relatively low.
Data source: WIND, the author compiled
So what exactly does Ping An of China's transactional financial assets account for? Among them: 230.846 billion yuan is a financial product. I never expected that Ping An bought so many financial products, 200.753 billion yuan is a fund. In addition, it also includes various bonds, stocks, non-listed equity, preferred stocks, etc.
Data source: WIND, the author compiled
and then looked at China Merchants Bank's trading financial assets. As of the end of 2018, trading financial assets included interest receivable, which was 327.643 billion yuan after deduction, and the main categories were bond investment and non-standard asset investment. The company stated that bond investment is mainly the need of the Group to grasp the trading opportunities of the bond market to improve investment returns, and non-standard asset investment is mainly non-standard investment in notes.
Data source: WIND, author compiled
For investors, the financial industry is too difficult to understand, and we don’t need to spend a lot of time to understand. We need to pay attention to a wider range of industries and companies. So, excluding the financial industry, what is the transactional financial assets of listed companies calculated?
After excluding the financial industry, the listed companies with the most transactional financial assets are China Shenhua, SAIC Group, Sinopec, Suning.com, etc., and the proportion of assets is not too high.
Data source: WIND, compiled by the author
The transactional financial assets of these listed companies are almost all financial products. For example, on December 31, 2018, China Shenhua had a total bank wealth management investment of RMB 30 billion, the financial investment period is 180 to 273 days, and the expected annualized rate of return is 3.10% to 3.90%. On December 31, 2018, it held RMB 2.447 billion in interbank certificates of deposit, with a maturity of 92 to 365 days, and an expected annualized rate of return of 2.75% to 4.35%.
Data source: WIND, compiled by the author
Among the above companies, SAIC Group, Vanke A, Sinopec, etc. are all financial products. We can make a basic judgment: the transactional financial assets held by non-financial companies are generally financial products, and there are very few stocks held by listed companies.
2. Rate of return of trading financial assets
Trading financial assets, like other assets, can generate returns and may also cause losses. Specifically, when wealth management products generate financial returns, they are included in investment returns; when stocks generate fair value changes, they are included in fair value changes, and first include profits and losses; when bond investments can collect interest and include investment returns.
Here, the rate of return on trading financial assets can be used to describe the profitability of a company's trading financial assets.
Calculation formula: Transactional financial assets return rate = fair value change profit and loss/average balance of trading financial assets.
The author derives the profit and loss of the trading financial assets of each company in 2018, and thus the profitability of the trading financial assets of each company can be calculated. It can be seen that the profit and loss of China Ping An's fair value changes was -28.284 billion yuan, and the yield was -3.43%. In addition, Postal Savings Bank and China Life Insurance lost 14.279 billion yuan and 8.148 billion yuan respectively. As for why the loss is not known. Of course, there are also a lot of profits, such as Minsheng Bank's profit was 8.357 billion yuan, with a yield of 2.19%.
Data source: WIND, the author compiled
Of course, there are two points to be explained here. First, the profit and loss that is included in fair value changes is not only trading financial assets, but also value changes in investment real estate. The financial industry is used here, and there is not much investment real estate. Second, there are some changes in financial assets that are also included in the profit and loss of fair value changes. For example, the profit and loss of fair value changes in Shanghai Bank is as high as 4.652 billion yuan, of which the transactional financial assets only bring about 57 million yuan, and the others are caused by the fair value changes in derivative financial instruments.
So the rate of return on trading financial assets here is just an estimate. An indicator to evaluate the profitability of trading financial assets must be analyzed in detail in the specific company.
3. The wonderful uses of trading financial assets
Understand what is the use of trading financial assets?
First, look at the content of listed companies' trading financial assets. If it is a financial product, it means that the company's cash is relatively sufficient. If it is a stock in the secondary market, it means that the company loves to speculate in stocks and has high performance elasticity.
The second is to look at the profit and loss of fair value changes, and make a better judgment on the net profit content of listed companies. If the profit and loss proportion of fair value changes is too high, then the company's net profit will be relatively low.
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