Likes ReceivedOutperforming the ChiNext Index by 38 percentage points in July! What is the logic behind the counter-trend strength of bank stocks? Fund managers have provided their commentary.
On July 30, banks once again defended the market against the trend, with all 42 bank stocks closing in the green. China Construction Bank rose over 3% during intraday trading, and Industrial and Commercial Bank of China (ICBC) rose over 2%, with both stocks setting new all-time highs. Additionally, Shanghai Pudong Development Bank and Shanghai Rural Commercial Bank rose over 4%, while Huaxia Bank, Chongqing Rural Commercial Bank, Bank of Communications, and 5 other stocks rose over 3%. Ping An Bank, Agricultural Bank of China, and 18 other stocks rose over 2%.
The Huabao Bank ETF (512800), a top-tier fund with over 10 billion RMB in assets, saw its on-exchange price surge by 2.56%, setting a new high for the year. Since entering the second half of the year, market styles have quietly shifted. The banking sector has swept away its previous slump, with the CSI Bank Index accumulating a gain of 13.3% over the period, outperforming the ChiNext Index by more than 38 percentage points (the ChiNext Index fell by 25.29% over the same period).
Feng Chencheng, the fund manager of Huabao Bank ETF (512800), pointed out that recently, the banking sector and the technology sector have shown a negative correlation in their trends, which has strengthened over the past month. In the short term, the seesaw effect influences the pace of bank stock recovery. From an allocation perspective, under low correlation conditions, the banking sector serves as a tool to smooth and reduce portfolio volatility, making its “hedging” value prominent.
Data Source: Wind, as of July 29, 2026. The benchmark index is the Wind Technology Broad Category Index (888012.WI).
Furthermore, data from the heavy-weight holdings disclosed in the fund's Q2 report shows that the allocation weight of the banking sector has dropped to a historic low. According to historical data calculations by Northeast Securities, “the banking sector often generates excess returns in periods following significant underweight positions”: From 2016 to present, when the holding ratio of bank stocks is below the 20th percentile historically, subsequent holding periods of 1 quarter, 2 quarters, 4 quarters, and 8 quarters can achieve median excess returns relative to the CSI 300 Index of 2.18%, 4.11%, 4.96%, and 5.94%, respectively.*
Regarding the current allocation value of the banking sector, Feng Chencheng believes that the mid-to-long-term logic for banks is valuation repair based on low valuations. Market volatility (investor sentiment) and risk appetite affect short-term stock price elasticity. Even in the high-risk-appetite environment of the first half of the year, bank declines were supported, and some banks reached new highs.
The stabilization of net interest margins this year is a key fundamental change. All banks in the industry benefit from the stabilization of the rate-cutting cycle. Since the beginning of the year, there have been no LPR rate cuts on the loan side, leading to an upward trend in earnings growth for large banks, while city commercial banks have seen stable growth. It is expected that mainstream banks will continue to maintain stable dividend payouts. Currently, the valuation repair process for state-owned large banks is leading, and it is expected to drive the valuation repair of other high-quality banks. Some high-quality city commercial banks still have a PB ratio of 0.7-0.8X. Relying on regional economic growth beta and robust asset quality, investors can pay attention to the valuation switching gains brought by net asset growth in the next year.
Riding the trend, combining offense and defense! Huabao Bank ETF (512800) and its feeder funds (Class A: 240019; Class C: 006697) passively track the CSI Bank Index. The constituent stocks include 42 listed banks on the A-share market, making it an efficient investment tool for tracking the overall performance of the banking sector. The Huabao Bank ETF (512800) has a fund scale of over 10 billion RMB, with an average daily turnover of over 700 million RMB since 2025, making it the largest in scale and best in liquidity among the 10 banking ETFs on the A-share market!
Data Source: Shanghai and Shenzhen Stock Exchanges, etc.
Institutional Viewpoint Source: Northeast Securities, July 25, 2026, "Banking Sector: Are There Excess Returns After Underweight Positions?"
ETF Fee Related Instructions: When investors subscribe to or redeem fund shares, the subscription and redemption agency may charge a commission at a standard not exceeding 0.5%, which includes relevant fees charged by stock exchanges, registration institutions, etc. Feeder Fund Fee Related Instructions: For Huabao CSI Bank ETF Feeder Fund (Class A), the subscription fee (front-end load) is 1,000 RMB per transaction for subscription amounts of 2 million RMB (inclusive) and above, 0.6% for amounts between 1 million RMB (inclusive) and 2 million RMB, and 1% for amounts below 1 million RMB. The redemption fee is 1.5% for holding periods of less than 7 days, 0.5% for holding periods of 7 days (inclusive) to 180 days, 0.25% for holding periods of 180 days (inclusive) to 1 year, and 0% for holding periods of 1 year (inclusive) and above. No sales service fee is charged. For Huabao CSI Bank ETF Feeder Fund (Class C), no subscription fee is charged. The redemption fee is 1.5% for holding periods of less than 7 days, 0.5% for holding periods of 7 days (inclusive) to 30 days, and 0% for holding periods of 30 days (inclusive) and above. The sales service fee is 0.2%.
Risk Warning: Huabao Bank ETF (512800) and its feeder funds passively track the CSI Bank Index, whose base date is December 31, 2004, and was published on July 15, 2013. The year-on-year changes of the CSI Bank Index for the last 5 complete years are: 2025, 6.79%; 2024, 34.71%; 2023, -7.27%; 2022, -8.78%; 2021, -4.41%. The volatility for the last 5 complete years is: 2025, 14.03%; 2024, 19.34%; 2023, 13.41%; 2022, 18.56%; 2021, 18.63%. The composition of the index constituents is adjusted from time to time according to the compilation rules of the index. Past performance does not predict future results. The index constituents mentioned in the text are for display purposes only, and individual stock descriptions do not constitute any form of investment advice, nor do they represent the holding information and trading trends of any funds managed by the manager. The risk level of the fund assessed by the fund manager is R3-Medium Risk, suitable for balanced-type (C3) and above investors. Any information appearing in this document (including but not limited to individual stocks, comments, predictions, charts, indicators, theories, and any form of expression) is for reference only. Investors must be responsible for any investment behavior decided autonomously. In addition, any views, analyses, and predictions in this document do not constitute any form of investment advice to readers, nor do we bear any responsibility for any direct or indirect losses caused by the use of the content of this document. Fund investment involves risks, past performance of the fund does not indicate its future performance, and the performance of other funds managed by the fund manager does not guarantee the performance of the fund. Fund investment requires caution.
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