On July 30th, the broader A-share market experienced a downturn, but the banking sector bucked the trend and strengthened.
By the close of trading that day, shares of Industrial and Commercial Bank of China (ICBC) and China Construction Bank (CCB) settled at 8.15 yuan and 10.97 yuan per share, respectively, both setting new all-time highs. Meanwhile, CM BANK, which had just returned to a trillion-yuan market capitalization the previous trading day, continued its upward momentum.
Beyond the major state-owned banks and leading joint-stock banks, other institutions such as Shanghai Pudong Development Bank, Shanghai Rural Commercial Bank, and Huaxia Bank also posted significant gains during the session.
Since the beginning of July, the Wind Banking Index has climbed 14.95%. After experiencing a periodic pullback in the first half of the year, the sector has shown a clear rebound in the second half.
Market analysts widely attribute the strong performance of banking stocks to a reallocation of capital following a shift in market hotspots, combined with the support of the listed banks' solid fundamentals and their own price-stabilizing measures.
High Dividend Yields Form the Sector's Foundation
In the recently concluded 2025 dividend season, 41 out of 42 A-share listed banks collectively distributed 645.637 billion yuan in cash dividends, an increase of approximately 13.5 billion yuan year-on-year. Total dividend payouts have set new historical records for three consecutive years, with stable cash returns providing a safe haven for defensive capital.
Share Buybacks and Market Value Management Stabilize Expectations
Since the start of 2026, A-share listed banks have seen a flurry of share purchases by shareholders and management. As of the end of July, more than ten banks, including Bank of Shanghai, Bank of Nanjing, Changshu Bank, and Postal Savings Bank of China, have disclosed progress on their respective buyback implementations.
Simultaneously, the market value management efforts of listed banks are transitioning from passive operations to a long-term mechanism driven by company management and multi-department coordination. Recently, several listed banks, such as China Everbright Bank, CM BANK, and China Citic Bank, have established "Market Value Management Groups" led by management to coordinate related work, regularly channeling market demands into internal business strategies and dividend decisions.
Institutions like ICBC, Shanghai Pudong Development Bank, Huaxia Bank, and Jiangsu Bank have also successively introduced "Market Value Management Systems" or "Valuation Enhancement Plans." By clarifying paths for cash dividends, investor relations management, and information disclosure, they aim to institutionalize market value management.
Although the secondary market has long been in a state of "trading below book value," this series of institutional arrangements and share purchase initiatives may help banks build a closed loop of "value creation, value transmission, and value realization."
Capital Flows Reflect a Shift in Risk Appetite
Capital flow trends indicate a change in investor risk appetite. Some analysts point out that when market volatility increases and risk appetite declines, low-risk-preference capital tends to concentrate on high-quality targets with resilient fundamentals and stable dividends. This allocation initially appeared in some well-performing regional city and rural commercial banks, and gradually spread to state-owned large banks and high-quality joint-stock banks with better liquidity and higher stability.
Regarding the future market outlook, a research report from CITIC Securities believes that in the second half of the year, the banking sector is expected to be revalued from a simple "high-dividend defensive asset" to a "high-certainty equity asset."
However, divergence within the sector is expected to continue: state-owned large banks have expectations of sustained improvement in profitability; the revenue recovery for joint-stock banks is relatively slow; and the performance divergence among city and rural commercial banks will depend more on the regional economic environment and the performance of non-interest income.
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