To The Moon

According to the latest information from Hong Kong Exchanges and Clearing's disclosure facility, Ping An Life Insurance increased its holdings of 44.05 million H-shares of Agricultural Bank of China (ABC) on December 22. Following this purchase, Ping An Life's holdings of ABC H-shares rose to 5.842 billion shares, accounting for over 19% of the bank's total H-shares. Under the "moderately loose" policy基调, the use of policy tools emphasizes "flexibility and efficiency," with maintaining ample liquidity being key. From a valuation perspective, after the phased adjustment since the second half of 2025, the banking sector's attributes of "high dividend yield and low valuation" have become prominent again. As of December 19, the average dividend yields for A-share and H-share listed banks were 4.3% and 5%, respectively. Among banks listed simultaneously in both the A-share and H-share markets, H-share banks demonstrate a relatively more obvious advantage in dividend yield. Everbright Securities released a research report stating that in 2025, banks face insufficient effective credit demand, leading to moderate profit growth. As 2026 marks the beginning of the "15th Five-Year Plan" period, monetary policy is expected to remain moderately loose, with interest rate cuts and reserve requirement ratio reductions anticipated. The credit structure will continue to show "strength in corporate lending and weakness in retail lending," and while net interest margins remain under pressure, the rate of decline may narrow. The investment thesis centered on the banking sector's "high dividend yield and low valuation" remains the primary theme, and demand for allocation by long-term funds is expected to persist. CITIC Securities stated in a research report that the recent appreciation of the Renminbi is favorable for the performance of Renminbi-denominated equity assets. The central bank's use of policy tools in the next phase will be more flexible, with an emphasis on domestic demand objectives. Looking ahead to 2026, stable macro-financial conditions point to a stable operating environment for banks. Net interest margins are expected to bottom out, risks in the real economy sector are gradually easing, and revenue and profits are recovering. The logic for absolute returns in the sector stems from a re-assessment of systemic risks in banks leading to valuation repair, coupled with stable equity return characteristics driving capital inflows into the sector. The sector is anticipated to continue its trajectory of valuation expansion in 2026. H-shares of domestic banks include: Agricultural Bank of China (01288), China Merchants Bank (03968), Industrial and Commercial Bank of China (01398), China Construction Bank (00939), China Minsheng Bank (01988), Postal Savings Bank of China (01658), China CITIC Bank (00998), among others.