Xin Lang Cai Jing·2025-08-04 02:55Core Viewpoint - The banking sector is experiencing a positive momentum with significant stock price increases, driven by expectations of stabilizing net interest margins despite ongoing downward pressure [1][2]. Group 1: Market Performance - As of August 4, the Bank ETF Index (512730.SH) rose by 1.15%, while the associated index, the China Securities Bank Index (399986.SZ), increased by 1.48% [1]. - Major constituent stocks showed strong performance, with Industrial Bank up 2.31%, Shanghai Pudong Development Bank up 3.95%, China Merchants Bank up 1.17%, Industrial and Commercial Bank of China up 1.84%, and Agricultural Bank of China up 1.90% [1]. Group 2: Industry Analysis - Analysts indicate that banks are implementing comprehensive strategies on both asset and liability sides to mitigate the decline in net interest margins, leading to improved market sentiment [1]. - Open Source Securities highlights a differentiated allocation of institutional funds towards bank stocks, suggesting a rotation effect within the sector [1]. - The firm recommends focusing on the evolution of the PB-ROE curve and believes there is still room for institutional allocation under the dividend logic [1]. Group 3: Valuation Insights - Based on the Dividend Discount Model (DDM), bank stocks are projected to have upward price potential, maintaining a "positive" industry rating [1]. - Recommendations include focusing on state-owned banks with controllable retail risks, high safety margins in joint-stock banks, and city commercial banks with strong profit elasticity [1].