Since the third quarter of 2026, A-share market style has shifted sharply. Technology growth stocks have been oscillating at elevated levels, while dividend-focused sectors such as banks and coal have bucked the trend and strengthened. Share prices of ICBC (01398), CCB (00939), and BANK OF CHINA (03988) have repeatedly hit record highs.
The latest position adjustments by public mutual funds also confirm this trend: multiple funds increased their holdings of bank stocks with high dividend characteristics in the third quarter. Red-dividend assets are undergoing a positioning upgrade from "defensive allocation" to "proactive offense," and high dividends are expected to become one of the main long-term investment themes.
Since October, banks, as the representative of red-dividend assets, have continued to strengthen, with multiple bank share prices hitting record highs for consecutive days. On October 19, ICBC's share price touched 8.65 yuan intraday, once again setting a record high. Its total market capitalization once again surpassed Changxin Technology, reclaiming the title of "market cap leader" in the A-share market.
As the largest and most stable dividend-paying sector among red-dividend assets, the banking industry's total dividend payout reached 266.587 billion yuan in the first half of 2026, ranking first among all industries. Twenty-one A-share banks disclosed interim dividend plans, with total proposed payouts exceeding 260 billion yuan. The dividend payout ratio of the six major banks was uniformly adjusted from 30% to 31%, with total proposed payouts exceeding 220 billion yuan.
Relevant sources stated that against the backdrop of a declining interest rate center and the continuation of the "asset shortage," red-dividend assets can still serve as one of the important foundational holdings in investment portfolios, and their dividend yield advantage will continue to attract allocation-oriented capital.
In the short term, under the backdrop of Federal Reserve rate hikes, the technology growth sector, which is more sensitive to the interest rate environment, may be significantly affected with intensified volatility, while the red-dividend sector benefits from its defensive attributes and offers relative returns.
The holdings of public mutual funds that have disclosed third-quarter reports confirm this. As of the end of the third quarter, Jinxin Smart China 2025 Mixed Fund's equity investment ratio was 80.23%, down 8.47% from the end of the second quarter. Its top ten holdings were ICBC, BANKCOMM, CITIC Bank, Industrial Bank, China Mobile, CCB, BANK OF CHINA, Bank of Shanghai, Ping An Bank, and Shanghai Pudong Development Bank. The fund significantly increased its positions in five bank stocks in the third quarter — ICBC, BANKCOMM, CITIC Bank, Industrial Bank, and BANK OF CHINA — with shareholding quantities all doubling from the end of the second quarter. The A-share prices of ICBC, CITIC Bank, and BANK OF CHINA have all hit record highs recently.
"Compared with the second quarter, the portfolio increased allocations to telecom operators and other intelligent-related stocks with high dividend characteristics, and also increased allocations to some high-dividend stocks beyond banks and insurance," the Jinxin Smart China 2025 Mixed Fund's third-quarter report showed.
Kong Xuebing, fund manager of Jinxin Steady Strategy Mixed Fund, believes that market capital needs to re-examine and differentiate the attribute differences between technology growth and manufacturing cycles, and structural divergence within the technology sector is inevitable. The short-term ultra-high gross margins obtained by relying more on overseas AI capital expenditure races and mature supply chain support may face cyclical volatility shocks and market repricing. Market capital's frenzied pursuit of short-term high-prosperity directions is expected to weaken, shifting toward embracing more sustainable growth, and the valuation-level differences between cyclical and growth attributes are expected to be reshaped.
Currently, the ten-year government bond yield has dropped to a historic low of 1.6%–1.7%, while the CSI Dividend yield remains at 3.8%–4%. The spread of more than 2 percentage points forms a powerful "bond-like substitution" effect. Long-term capital such as insurance, social security, and pension funds, under the pressure of "asset shortage," continues to increase allocations to stable dividend-paying assets. Huatai Securities estimates that the insurance industry had allocated 2.1 trillion yuan in red-dividend stocks by the end of the first half, and still has an allocation gap of about 1.9 trillion yuan in the future.
Meanwhile, the market has recently fallen into volatility again, the technology sector continues to adjust, and the appeal of red-dividend assets has become prominent. Taking the dividend low-volatility index as an example, Wind data shows that as of October 9, the CSI Dividend Low Volatility Index had risen 0.47% since September, while the Shanghai Composite Index fell 4.33% and the CSI 300 Index fell 6.66% during the same period.
Market analysts believe that capital shifting to the red-dividend sector is mainly due to the upward trend in U.S. Treasury yields suppressing growth stock valuations, combined with heavy profit-taking in the technology sector from earlier gains. Capital is flowing from high-level technology stocks to low-valuation red-dividend sectors, reflecting short-term risk aversion and style rebalancing needs.
Sha Chuan, fund manager at Tianhong Fund, stated that since the beginning of this year, the main investment theme in the market has always revolved around technology growth, and the red-dividend sector's performance mainly comes from capital's阶段性 defensive needs after the sharp rise in the technology sector. In the long run, against the backdrop of population aging and gradual development, domestic interest rates may remain at a low level for a long time or even decline further. Red-dividend assets, due to their relatively stable performance and dividend returns, may be favored by capital over the long term and represent one of the better long-term investment theme directions.
Shenwan Hongyuan released a research report stating that 2026 is a year with certain fundamental support for banks, and it is expected that listed banks will continue the trend of "revenue improvement and stable profit growth" in their third-quarter reports. Coupled with favorable catalysts such as multiple banks implementing interim dividends in the fourth quarter and patient capital expected to return, it is bullish on banks. Currently, it continues to focus on high-quality city commercial banks and state-owned large banks with the strongest certainty of fundamental improvement, maintaining the judgment that "state-owned large banks will steadily lift the sector's valuation center, and high-quality city commercial banks will be the first to reach 1x PB."
China Merchants Fund stated that red-dividend assets are undergoing a positioning upgrade from "defensive allocation" to "proactive offense." During the October third-quarter report window, technology growth may see phased repairs, and the barbell strategy of "red-dividend foundation + technology satellite" remains a relatively balanced allocation approach currently.
Related concept stocks: ICBC (01398): Daiwa released a research report, initiating coverage on ICBC with a "Hold" rating and an H-share target price of HK$7.8. The report noted that ICBC is the world's largest bank by total assets and is consistently ranked as the most profitable financial institution, but its current valuation multiple of 0.55 times 2026 forecast price-to-book has already reflected its funding advantages.
CCB (00939): Daiwa released a research report, initiating coverage on CCB with a "Buy" rating, a target price of HK$11.05, and viewing it as its top pick in the Chinese banking sector. The report noted that CCB is China's second-largest bank by total assets, and driven by funding cost advantages and fee contribution, its 2025 return on shareholders' equity was 10.1%, ranking second among state-owned banks.
BANKCOMM (03328): Released its 2026 interim results, with net operating income of 142.540 billion yuan, up 6.77% year-on-year; net profit (attributable to parent company shareholders) of 47.874 billion yuan, up 4.04% year-on-year; earnings per share of 0.52 yuan.
BANK OF CHINA (03988): Morgan Stanley released a research report, giving BANK OF CHINA an "Overweight" rating, expecting BANK OF CHINA to benefit from stabilizing net interest margins and resilient offshore profit margins, maintaining steady revenue and profit growth; and with its extensive global network and international business, it is expected to capture cross-border business growth and opportunities from Chinese enterprises going global. The report noted that BANK OF CHINA's 2026 expected dividend yield is about 4.9%, which is attractive, and major insurance companies' shareholdings are relatively low, which may provide additional valuation support when institutional demand for high-dividend financial stocks rises.
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