CITIC Securities: Bank stock fund holdings have rebounded from historic lows, and defensive attributes are favored by capital
The Zhitong Finance App learned that CITIC Securities released a research report saying that institutional holdings have clearly rebounded, and it is expected that the upward direction of valuation will continue to be interpreted throughout the year. Since July, the market style has been rebalanced, and the performance of the banking sector has clearly picked up. Both absolute returns and relative returns have recorded good performance. Public equity holdings have also clearly rebounded 0.92 ppts to 1.93%, the highest level since 2025Q3. The bank believes that the sector has multiple resonance effects of market style, improved capital, and stable operating expectations. Looking at investment strategies, bank stocks are affected by capital fluctuations in the short term, but the medium-term direction is driven by fundamentals and allocation-type capital. The sector is expected to be revalued from “high-dividend defensive assets” to “high-certainty equity assets.” It is expected that the upward direction of valuation will continue throughout the year.
CITIC Securities's main views are as follows:
Bank stocks accounted for 1.93% of active fund heavy holdings in 2026Q3, up 0.92 ppts from 2026q2, and clearly rebounded from historical lows
In the third quarter of 2026, the banking sector experienced significant recovery. Main considerations: 1) As the market fluctuates downward, and capital flows to the defensive sector under style rebalance, the safe-haven nature of the banking sector is clearly evident; 2) The banking sector's 2026 interim report shows that interest spreads are optimistic, asset quality is stable, overall revenue is optimistic, and profit growth continues to repair the pattern; 3) The peak of passive capital sales in the first half of the year has passed. Public funding agency holdings and northbound capital holdings are at a relatively low level in recent years. As of the end of the third quarter of 2026, the China CITIC Bank Stock Index (CI005021.WI) rose 16.8% from the end of the second quarter of 2026. Over the same period, the Wandequan A Index fell 13.3%, the Shanghai and Shenzhen 300 Index fell 12.5%, and the Science and Innovation Composite Index fell 28.0%. The absolute and relative earnings of the banking sector improved markedly. The share of bank stocks in active fund holdings rebounded 0.92 ppts to 1.93% at the end of the third quarter of 2026 from the end of the previous quarter, the highest level since 2025Q3.
All types of bank stock holdings recorded an increase. Bank of Ningbo ranked first in terms of holding ratio, while Bank of Ningbo and China Merchants Bank had the highest increase ratio
As of the end of 2026Q3, state-owned banks, stock banks, urban commercial banks, and agricultural commercial banks accounted for 0.44%/0.42%/0.98%/0.09% of active fund holdings, respectively, +0.271/+0.175/+0.456/+0.025PPTs, respectively, compared to the end of 2026q2. All types of bank stock holdings recorded an increase. Among them, the share holdings of urban commercial banks and state-owned banks increased significantly.
1) In terms of individual stock holdings, Bank of Ningbo ranked first. At the end of the third quarter of 2026, the top five bank stocks of active funds were Bank of Ningbo, China Merchants Bank, Bank of Jiangsu, Industrial and Commercial Bank, and Bank of Hangzhou, which accounted for 0.39%/0.31%/0.19%/0.15%/0.11%, respectively; the share of heavy holdings in the sector was 20.13%/16.01%/9.91%/7.89%/5.58%, respectively, accounting for a total share of 59.5% (59.5% at the end of the second quarter of 2026).
2) Judging from marginal changes, Bank of Ningbo and China Merchants Bank have the highest increase ratio. As of the end of the third quarter of 2026, the top three position increases were Bank of Ningbo, China Merchants Bank, and Bank of Jiangsu. The holding ratio increased by 0.167/0.139/0.098 ppts respectively compared to the end of the second quarter of 2026. In the third quarter of 2026, the holding ratio of 28 banks in the banking sector increased, and the holding ratio of 7 banks declined.
Northbound's shareholding rebounded markedly, and Nanxia's shareholding rebounded slightly since October
1) The shareholding ratio of Northbound Capital in the banking sector rebounded markedly in the third quarter. As of September 30, 2026, the shareholding ratio of Northbound Capital in the banking sector was 1.98%, up 0.44 ppts from the end of the second quarter of 2026, ending the previous continuous decline. In terms of individual stocks, as of September 30, 2026, CCB's share holdings in the market value in circulation ranked first among A-share listed banks, at 7.9%. In addition to China Construction Bank, Bank of Ningbo, China Merchants Bank, Ping An Bank, and Ruifeng Bank account for a high share of the market value in circulation, which is 7.0%/6.4%/6.2%/5.1%, respectively.
2) The share ownership ratio of capital moving south in the banking sector has rebounded slightly since October, reaching a new high during the year. As of October 26, 2026, the shareholding ratio of capital going south in the banking sector was 16.68%, up 0.42 ppts from the end of the third quarter of 2026, and slightly higher than the June high (16.64%). Looking at individual stocks, as of October 26, 2026, Bank of Zhengzhou, Agricultural Bank, Industrial and Commercial Bank of Chongqing, Rural Commercial Bank of Chongqing and Bank of China accounted for a high share share in the market value in circulation, reaching 54.9%/52.0%/40.9%/38.1%/35.7%, respectively.
risk factors
The macroeconomic growth rate declined sharply; the quality of bank assets deteriorated beyond expectations; regulatory and industry policies changed beyond expectations; and the implementation of companies' development strategies fell short of expectations.