Financial data shows that with the interim reporting season approaching and hard-tech stocks experiencing their sharpest decline of the year, risk appetite has weakened, pushing capital toward defensive high-dividend plays. This has driven the four major Chinese banks to simultaneously reach new all-time highs.

As of the latest trading, ABC (01288) rose 3.01% to HKD 6.51, BCQ (01963) gained 2.99% to HKD 8.62, ICBC (01398) climbed 2.14% to HKD 7.64, CCB (00939) added 1.19% to HKD 9.32, and BANK OF CHINA (03988) edged up 0.73% to HKD 5.52.

Key drivers behind the rally

Analysts point to a convergence of factors. Since the third quarter, market risk preferences and capital style have been rebalancing, creating a window for sector rotation. The banking sector's interim fundamentals are expected to meet or beat expectations, showing a clear improvement over the past three years. Combined with its high-dividend defensive appeal, the sector is positioned to sustain its current valuation repair rally.

Separate analysis suggests that banking operations have already bottomed out, with a definitive improvement expected by 2026. Interim revenue growth is forecast to remain in the high single digits year-over-year, while net profit attributable to shareholders should see steady or slightly higher growth, pointing to a positive full-year outlook. As net interest margins stabilize, revenue elasticity in 2026 is likely to recover significantly from the past three years, with net interest income potentially regaining its role as the primary growth driver after a period of "higher volume, no income" stagnation.