Which investment logic is favored by the synchronized counter-trend of AH banking stocks in adherence to these rules?
To what extent is there still upward potential for bank positions in equity-based funds, particularly since they are currently at a low point not seen since 2010?
Hong Kong banking stocks followed A-share banking sectors in upward trends today.
As of the time of writing, $PSBC (01658.HK)$They increased nearly 3%, more than 2%, and up by more than 1%, respectively, setting historical highs.$ABC (01288.HK)$Up nearly 2%,$ICBC (01398.HK)$Increased by more than 1%, $CITIC BANK (00998.HK)$,$BANK OF CHINA (03988.HK)$both continued to rise.
On the news front, the latest interest rate cut was introduced domestically and brought about market expectations of policies to stabilize growth in the second half of the year.
On July 22, the People's Bank of China announced a 10 basis point cut in OMO interest rates and adjusted open market operation methods. The PBOC also announced a phased reduction of MLF collateral for institutions selling medium- and long-term bonds. LPR followed suit on the same day, reducing 1-year and 5-year LPR rates by 10 basis points, highlighting macroeconomic relaxation signals.
According to a CITIC Securities study, the combination of interest rate cuts is a policy attribute that promotes enhanced 7-day reverse repo rates and streamlines interest rate transmission relationships. This is beneficial to increasing financial support for the real economy while also balancing supply and demand in the bond market.
In other reports, Huafu Securities' Zhang Yu and Guo Qiwei said on July 22 that although lowered interest rates have negative effects on bank interest margins, the scope of influence is relatively controllable. From a medium- to long-term perspective, interest rate reductions help to boost credit demand, improve economic expectations and ultimately maintain a bullish bank market performance.
It is worth noting that, against the backdrop of stabilized bank net interest spreads and market-based deposit rate adjustments, state-owned banks are reportedly considering lowering deposit listing rates, which is expected to lead to a new round of rate cuts.
Driven by the above news, the A-share banking sector continues to rise, with Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China all reaching historically high levels. The Hong Kong banking sector was also clearly driven by the trend.
On the other hand, although bank stocks have remained strong this year, institutional positions in bank stocks are still at historic lows.
According to institutional reports, from the perspective of holding data, equity-based funds increased their bank stock positions on a month-to-month basis in the second quarter, but it is still below the average since 2010. Within this figure, larger banks saw more increased allocations.
In addition, bank stocks' currently high dividend yields continue to see interest.
Huatai Securities noted that, with solid bank fundamentals at the bottom, banks are seen as high-quality, low-volatility assets whose valuations are still relatively low, highlighting their dividend advantages.
Data shows that as of July 19, A/H bank sector PB valuations were 0.61 times and 0.40 times, respectively, and A/H bank sectors' dividend yields in the past 12 months were 5.50% and 8.12%, respectively.
Huafu Securities also believes that the main drivers of bank stock trends this year include the expansion of high-dividend strategies, relaxed property policies, and the slowing down of net interest rate declines.
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