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Bank stocks continued to be strong, with two major funds increasing their holdings behind the scenes.

Today, the Shanghai Composite Index fluctuated and adjusted, while the Shenzhen Component Index and the ChiNext Index showed weak trends. Space economy concepts rose against the market trend, with many stocks such as Pathfinder and Sanfu Outdoor hitting their daily limit. Game stocks collectively adjusted, with Huayi Brothers and Xinxunda falling by more than 10%; robots, cosmetics, education and other sectors saw the largest declines.

Bank stocks continued to be strong today. Bank of Shanghai, Bank of Jiangsu, Postal Savings Bank of China and Bank of Communications all hit new highs for the year during intraday trading. The new "market value leader" Industrial and Commercial Bank of China, as well as Bank of China and China Construction Bank set new historical highs.

Insurance funds boost banking sector gains

According to statistics from Securities Times Databao, bank stocks have performed strongly overall since the beginning of this year, with the banking index rising 18.55% year-to-date, ranking first on the list of Shenwan's 31 industry indexes.

In addition to the market's favor for high-dividend and other dividend-paying sectors, the insurance industry and broad-based ETFs have also played a major role in boosting the continued rise of the banking sector.

According to data released by the State Financial Supervision and Administration Bureau, as of June 2024, the insurance premium income of insurance companies this year totaled 3546.7 billion yuan, a year-on-year increase of 10.65%; the balance of insurance funds was 30866.8 billion yuan, a year-on-year increase of 10.98%. The growth in the absolute size of insurance funds has increased the demand for allocation and injected a large amount of liquidity into the market.

In terms of the increase during the year, as of the end of the second quarter, the book balances of stocks held by property and casualty insurance and life insurance increased by RMB 10.5 billion and RMB 126.4 billion respectively compared with the end of 2023; the book balances of funds held increased by RMB 7.5 billion and RMB 161.8 billion respectively compared with the beginning of the year. Banks, as a traditional heavy holding area for insurance institutions, may benefit significantly from the increase in insurance funds.

Funds use broad-based ETFs to increase their holdings in the banking sector

As of now, the on-exchange ETFs have received a total net inflow of 731.884 billion yuan this year. Among them, the top five ETFs with the largest net inflows are Huatai-PineBridge CSI 300 ETF, E Fund CSI 300 ETF, Hua Xia CSI 300 ETF, Harvest CSI 300 ETF, and Hua Xia SSE 50 ETF, with a total net inflow of 493.665 billion yuan.

It can be seen that this year, funds have mainly increased their holdings in the CSI 300 through ETFs, and banks, as the CSI 300's largest weighted industry, have benefited significantly.

Several A-share listed banks plan to implement interim dividends

According to statistics from Securities Times Databao, there are currently four listed banks planning to implement mid-term dividends.

On August 16, Shanghai Rural Commercial Bank launched a mid-term dividend plan in its semi-annual report, with a cash dividend of 0.239 yuan per share, accounting for 33.07% of the parent's net profit. The dividend rate will be further increased compared to 2023.

On August 15, Ping An Bank announced its first interim dividend plan since its listing, with a cash dividend of 2.46 yuan (tax included) per 10 shares, totaling approximately 4.8 billion yuan, accounting for about 18% of the net profit attributable to shareholders of the parent company in the first half of 2024.

The progress of the mid-term dividend plans of Nanjing Bank and Minsheng Bank are respectively at the stage of approval by the shareholders' meeting and pre-disclosure of the board of directors' plan.

In addition, the five major state-owned banks, namely Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Bank of China and Bank of Communications, have previously stated that they are preparing to implement mid-term dividends in 2024.

Currently, among the A-share bank stocks, 11 companies have disclosed their semi-annual reports or express reports. The weighted return on equity of Qilu Bank, Ruifeng Bank, Hangzhou Bank and Zheshang Bank ranked at the top, all exceeding 9%; the return on equity of banks such as Qilu Bank, Ruifeng Bank, Zheshang Bank and Pudong Development Bank has increased compared with the same period last year.

Industry insiders said that bank stocks themselves are undervalued but have high dividends and have allocation value. The increase in holdings by multiple funds, especially the influx of ETF funds, has become the basic logic behind the buying spree of bank stocks. In addition, many listed banks have recently disclosed their "midterm exam" report cards, and the net interest margin has shown a slight stabilizing trend, driving bank stocks to continue to rise.