On the morning of July 14th, the Shanghai Composite Index briefly fell below 3,900 points, touching a low of 3,869.30, before staging a strong rebound in the afternoon session. By the close, all three major A-share indices had ended higher. The Shanghai Composite Index rose 1.36% to 3,967.13 points, the Shenzhen Component Index gained 2.77% to 14,924.87 points, and the ChiNext Index advanced 3.43% to 3,851.14 points.

As of July 14th, the banking sector has accumulated a gain of 7.01% for the month, with all 42 listed bank stocks posting increases. Among them, Bank of Suzhou, Bank of Nanjing, and Bank of Xi'an have seen monthly gains exceeding 10%.

Listed banks have recently entered a concentrated dividend distribution period. Since July, 17 A-share listed banks have either paid or are about to pay their 2025 annual dividends, with a total payout reaching CNY 182.8 billion. Six banks, including China Construction Bank and Bank of China, have distributed dividends exceeding CNY 10 billion each.

A financial analyst commented that the banking sector's rebound this month is primarily driven by market funds seeking safe-haven assets and increased interest in high-dividend-yield stocks. Against a backdrop of heightened volatility in the technology sector, bank stocks, as traditional defensive investments, have attracted investors with their stable dividends and relatively low valuations. Particularly during the dividend season, substantial cash payouts have further enhanced the appeal of bank stocks, supporting their prices and leading to a short-term rebound.

The analyst believes that as market dynamics shift, some capital is rotating from previously high-flying tech stocks towards bank stocks, which offer stable income characteristics, to rebalance asset allocations. This rotation helps reduce overall portfolio risk, especially in an environment of elevated market uncertainty.

Banking Sector Stages Strong Rebound with All 42 Constituents Rising

Since July, technology and growth sectors such as semiconductors and commercial aerospace have experienced volatile corrections, while bank stocks, seen as dividend assets, have rebounded strongly from their year-to-date lows.

Data shows that on July 1st, a key banking index hit its lowest point for the year at 6,365.67. From July 1st to 14th, the banking sector accumulated a gain of 7.01%, ranking fourth among 35 industry sectors, trailing only pharmaceuticals, oil & petrochemicals, and daily consumer retail. All 42 bank stocks rose during this period. Conversely, previously leading sectors like semiconductors and hardware equipment ranked at the bottom, falling 13.88% and 11.91% for the month, respectively.

Year-to-date, industry performance has shown a significant divergence. As of July 14th's close, only 7 out of 35 sectors have posted gains. The semiconductor sector leads with a year-to-date surge of 67.37%, far outpacing others. Hardware equipment and non-ferrous metals rank second and third, up 20.59% and 10.60%, respectively. The banking sector, however, is still down 2.07% for the year, having not fully recovered its losses despite the July rally.

Looking at individual A-share bank stocks, only 11 out of 42 have gained year-to-date. Qingdao Bank, Bank of Chengdu, Bank of Jiangsu, and Bank of Ningbo are among the top performers, with gains of 27.01%, 15.98%, 14.77%, and 14.10%, respectively. On the downside, Shanghai Pudong Development Bank, Agricultural Bank of China, and Ruifeng Rural Bank have declined the most, falling 26.37%, 15.44%, and 14.47%, respectively.

A chief economist noted that recently, trading volume for the top 5% of A-share stocks accounted for 50% of the daily total, a record high reflecting excessive concentration risk. Historically, when this indicator exceeded 45%, it led to style shifts or market reversals. This time is no exception; following extreme concentration, tech stocks have seen sustained declines, while previously weak traditional sectors have rebounded against the trend, indicating a style shift.

"After prolonged declines, traditional sectors are gradually attracting some capital attention, leading to a rebound. Although the rebound magnitude may not match that of tech stocks, the risk is lower, allowing for risk diversification through balanced allocation," the economist stated.

A fund manager added that, overall, the short-term market is volatile, with AI and tech fluctuations amplifying. The extremely polarized market style is facing rebalancing. Structurally, attention should be paid to potential recovery opportunities in assets that have fallen significantly. Technology may remain one of the medium-term themes. During the interim report disclosure window, sectors with clear industry trends, high and certain earnings growth, and attractive valuations are favored.

17 Banks Distribute Dividends This Month Totaling CNY 182.8 Billion

Listed banks are currently in a peak dividend distribution period.

On July 16th, Shanghai Pudong Development Bank and Bank of Ningbo are scheduled to pay their annual dividends, totaling approximately CNY 13.9 billion and CNY 5.9 billion, respectively.

Since July, 17 listed banks have either paid or are set to pay their 2025 dividends, with a combined payout of CNY 182.8 billion. Six banks—China Construction Bank, Bank of China, China Merchants Bank, Bank of Communications, Shanghai Pudong Development Bank, and Postal Savings Bank of China—have each distributed over CNY 10 billion, with amounts reaching CNY 53.0 billion, CNY 37.6 billion, CNY 25.2 billion, CNY 14.8 billion, CNY 13.9 billion, and CNY 11.4 billion, respectively.

Based on closing prices as of July 14th, 13 out of the 42 A-share listed banks offer dividend yields exceeding 5%. Industrial Bank and China Everbright Bank have the highest yields, at 6.11% and 6.09%, respectively.

A recent securities research report noted that in a low-interest-rate environment, bank dividend yields remain attractive compared to long-term rates, and long-term capital's demand for stable cash-flow assets persists; the sector's bond-like characteristics and defensive value remain intact. However, after the previous rally, the relative attractiveness within dividend assets has diverged, reducing the effectiveness of selecting stocks based solely on static dividend yield. In the second half of the year, the market will place greater emphasis on dividend payout stability, capital adequacy levels, asset quality resilience, and earnings sustainability. Large banks still possess strong defensive dividend attributes.

The report suggests the sector's focus is shifting towards "dividend certainty" and "fundamental verification." For allocation, it recommends maintaining large banks with stable dividends, high capital safety margins, and robust asset quality as a defensive core, preserving the sector's dividend allocation value. Simultaneously, based on interim report verification and operational recovery clues for the second half, selectively focus on high-quality joint-stock and regional banks with leading asset quality, earlier alleviation of net interest margin pressure, stronger regional economic resilience, and potential for recovery in non-interest income businesses.

The financial analyst concluded that although bank stocks currently offer high dividend yields, the industry still faces challenges such as slowing growth and narrowing net interest margins. Therefore, investors should consider long-term fundamental factors, not just short-term dividend income, when making allocations. It is advisable to comprehensively evaluate a bank's profitability, asset quality, and business transformation potential, and make reasonable asset allocation decisions based on one's own risk appetite and investment objectives. Simultaneously, maintaining awareness of market dynamics and adjusting investment strategies timely is crucial to navigate the ever-changing market environment.