On July 23, Guolonghui reported that CICC published a report stating that it has compiled statistics on the position and valuation of public funds for bank stocks in the second quarter. The bank stock fund position is 2.64%, up 0.28 percentage points quarterly, mainly due to the good performance of bank stocks. Since the beginning of the year, A-shares and H-shares of banks have risen by 26.3% and 19.4%, respectively, and state-owned banks and some regional banks have performed well. Currently, the overall banking sector is still underallocated by funds by approximately 10.5 percentage points, with a historical high degree of underallocation, showing that there is still room for banks to increase positions. The report pointed out that northbound funds flowed into China Merchants Bank and Shanghai Pudong Development Bank, while southbound funds flowed into state-owned banks. In the past three months, northbound funds flowed into China Merchants Bank by 2.67 billion yuan and into Shanghai Pudong Development Bank by 2.15 billion yuan. In the near future, southbound funds have flowed into Bank of China. In the past three months, it has accumulated a total inflow of 26.97 billion Hong Kong dollars, and it has maintained an inflow trend for other major banks while there is a significant outflow of funds from HSBC Holdings. In the second quarter, bank holdings have increased, but there is still room to increase positions relative to the market value ratio and historical holdings level of the banking sector. Under the background of the current downward interest rate, bank stocks with high dividends are attractive. After the rapid rise of bank stocks, short-term volatility has increased. It is recommended to adjust positions based on valuation and selectively enter stocks with more stable fundamentals. It is recommended to pay attention to banks with stable operations and high dividends such as China Construction Bank, Agricultural Bank of China, China Merchants Bank, HSBC listed in Hong Kong, as well as Minsheng Bank with marginal improvement potential in performance and financing demand. Banks like China Merchants Bank have more flexibility under the policy expectation.