On December 23, the Financial Association reported (edited by Feng Yi) that today the four major banks in A-shares, Agricultural Bank Of China, Bank Of China, China Construction Bank Corporation and Industrial And Commercial Bank Of China, have reached new highs. Hong Kong-listed China Mainland Banking stocks also followed suit and collectively strengthened, with H-shares of Industrial And Commercial Bank Of China and China Construction Bank Corporation approaching historical highs.

As of the time of writing, Industrial And Commercial Bank Of China (01398.HK) is up about 4%, China Construction Bank Corporation (00939.HK) is up nearly 3%, Bank Of Communications (03328.HK) is up over 2%, and Bank Of China (03988.HK), Agricultural Bank Of China (01288.HK), and other bank stocks have also shown significant gains.

CITIC SEC's Research Reports believe that after the important meeting in December, the market's speculation on policy has entered a phase of conclusion. In the asset allocation framework for the renminbi, bank stocks will still be a strong direction with certainty, and at the end of the year and the beginning of the new year, it will enter the season of insurance's new year opening and increased allocation. Bank varieties with high dividends, low volatility, and stable operation are expected to remain the direction for insurance capital's increased allocation.

On the news front, the LPR quote in December remained unchanged, the year-end interest rate cut expectations were dashed, which also benefits the banks by stabilizing their net interest margins.

On the other hand, after the release of November's economic data, the market once accelerated its 'early run', with major interbank interest rate bond yields falling across the board. The yields on 10-year and 30-year government bonds have recently continued to hit new lows, which has indirectly elevated the market's attractiveness of bank and other high-yield dividend sectors.

It is worth mentioning that on December 17, the State-owned Assets Supervision and Administration Commission issued several opinions on improving and strengthening the market value management of central enterprises with controlling listed companies, placing great importance on the issue of controlling listed companies breaking net assets, and incorporating the resolution of long-term net asset deficits into annual key tasks, guiding long-term deficit listed companies to formulate disclosure and valuation enhancement plans and supervising their execution.

As of December 20, the expected PB for the banking sector in A-shares is 0.63 times for 2024, which is in a broken net status, with state-owned banks corresponding to a PB of 0.65 times and joint-stock banks corresponding to a PB of 0.63 times.

According to data from Wind News, since the beginning of this year, 23 listed Banks have seen significant Shareholding from important Shareholders.

Overall, benefiting from the advancement of a new round of debt replacement and the implementation of a package of real estate policies improving the expected quality of bank Assets, along with the continuous expansion of passive Index Funds, high-weight Sectors like Banks are receiving more attention from Institutions.

In addition, a report by analysts Ma Tingting and Chen Huiqin from CITIC SEC on December 22 also pointed out that the continuous implementation of economic policies makes the counter-cyclical attributes of the banking Sector worth noting.

CITIC SEC reviewed the stock price trends of Banks during the two policy-driven cycles from 2008-2010 and 2014-2016, and found that it takes about 11-15 months from the policy shift to economic stabilization, during which time Bank stocks also show significant absolute returns.