According to Citigroup's report, China mainland banking, which serves as the theme of interest-bearing investment, has been the best-performing sector in the A-share market this year, with a 21% increase since the beginning of the year, compared to only a 2.3% increase in the CSI 300 index. Among them, regional banks that issue convertible corporate bonds have performed particularly well because management has an incentive to release profits by converting convertible corporate bonds or supplementing capital, thereby driving faster profit growth than their peers.

Citigroup has begun a positive observation of the Chongqing Rural Commercial Bank (03618.HK) for the next 30 days, and has initiated a negative observation of the Bank of Communications (03328.HK) and China Merchants Bank (03968.HK). The bank pointed out that China mainland bankingis still under pressure in the second quarter, and individual companies may deliver positive surprises. Banks that have announced profit incentives are preferred because convertible corporate bonds still have considerable room for upward growth. (vc/w)

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