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Zhitong Finance APP learned that Industrial Securities released a research report saying that the banking sector has led the performance this year. As of August 19, the Shenwan Bank Index rose by 19.08%, ranking first among all 31 primary industries, and its earnings exceeded the second place by 10%. Among them, the share prices of the five major banks of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, Construction Bank of Communications, etc. hit new highs. Behind the rise of banks, on the one hand, in the environment of pursuing high winning rate and certainty this year, the market is chasing the low-volatility direction of dividends represented by banks, especially the five major banks. More importantly, it is the change of incremental funds-it has been repeatedly emphasized since the beginning of the year that this year's dominant incremental funds are mainly two, one is ETF and the other is insurance. These two funds have a high proportion of allocation to banks, and therefore have become an important driver of bank rises.

Industrial Securities' main views are as follows:

1. The high growth of insurance premiums has led to a large inflow of insurance funds, bringing incremental funds to the market, especially to the banking sector in which it has a large position.

According to data released by the National Financial Total, as of June 2024, the cumulative year-on-year growth in insurance companies' premium income this year was 10.65%, and the balance of insurance funds also increased by 9.62% from the beginning of the year, bringing a large amount of insurance fund allocation demand. Therefore, although the overall market performance this year is still relatively weak, the equity position of insurance funds is also at a historical low. However, the growth in the absolute scale of insurance funds has still injected a lot of liquidity into the market. As of June 2024, the total scale of stocks and funds held by property insurance + life insurance (accounting for 96.6% of the total scale of insurance funds) increased by 136.9 billion and 169.3 billion yuan respectively from the beginning of the year, becoming a rare increase in the market this year.

Among them, banks, as the largest holding direction of insurance funds, have also benefited significantly from the continuous inflow and increase of insurance funds. This year, we have seen cases such as Wuxi Bank being held by insurance funds. At the same time, as of the first quarter of 2024, bank holdings accounted for as high as 48.3% of insurance funds' holdings, an increase of 0.8 percentage points from the beginning of the year, indicating that banks are still an absolute stronghold of insurance funds.

2. ETFs have become an important marginal growth in the market this year, and banks are the direction in which their holdings account for the highest proportion

This year, ETF funds have flowed in significantly and mainly increased their holdings in the CSI 300 Index. As the largest weighted industry in the CSI 300 Index, banks have also benefited significantly. According to estimates, as of August 16, the net inflow of stock ETFs this year was about 629.3 billion yuan, of which broad-based ETFs had a net inflow of 635.9 billion yuan, and other types had a small net outflow. Broad-based ETFs are the core source of incremental funds, and the largest inflow is the ETF product tracking the CSI 300 Index, with a net inflow of about 447.7 billion yuan this year, accounting for more than 70% of the total net inflow of broad-based ETFs.

Therefore, the impact and shaping of the capital side on market style is the direction that the market needs to focus on this year.

Since the beginning of this year, we have been emphasizing the large-cap and leading styles. A key factor is also the channel of incremental funds - insurance and ETFs are all based on large-cap leading companies as the core of their configuration, driving the large-cap leading style to become the real beta of the market this year.

In addition, the necessity of research on the funding side must also be taken seriously. In the past, it has always been emphasized that "funds determine style". This year, we have witnessed the impact of funding on the main line of the market - the rise of banks cannot be effectively explained from the perspective of fundamentals, and funding is a more important driving factor.

Risk Warning

Pay attention to fluctuations in economic data, policy tightening beyond expectations, and the Federal Reserve's unexpected interest rate hikes, etc.