Da Zhong Ri Bao·2025-08-13 02:47Core Viewpoint - The A-share banking sector has shown strong performance since the beginning of 2025, with major state-owned banks like Industrial and Commercial Bank of China reaching historical highs in stock prices. The outlook for the sector remains positive due to improved fundamentals and valuation recovery, suggesting a continued upward trend in stock prices [1][13]. Banking Sector Performance - As of June 25, 2025, the A-share banking sector continued its strong upward movement, with major banks achieving historical stock price highs by July 10. Agricultural Bank of China surpassed Industrial and Commercial Bank of China with a market capitalization of 2.11 trillion yuan, becoming the new "king of market capitalization" in A-shares [1][13]. - By August 11, 2025, the Tonghuashun banking index had accumulated a year-to-date increase of over 16%, significantly outperforming major stock indices [1][13]. Institutional Investment - Public funds and insurance companies have increased their allocations to banking stocks. By the end of Q2 2025, the total market value of public fund holdings in banking stocks exceeded 205.3 billion yuan, reflecting a 27% quarter-on-quarter increase. A total of 93 fund companies held shares in Agricultural Bank of China, with a holding quantity of 1.037 billion shares valued at 6.097 billion yuan [1][13]. Share Buyback Plans - The rising stock prices have influenced some banks' share buyback plans. Chengdu Bank announced adjustments to its buyback plan due to stock prices exceeding the original upper limit set for the buyback [1][14]. - Huaxia Bank disclosed a share buyback plan involving its directors and senior management, intending to voluntarily increase their holdings by at least 30 million yuan within six months starting from April 11, 2025 [2][14]. Fundamental Improvements - Analysts attribute the strong performance of banking stocks to substantial improvements in fundamentals, including enhanced asset quality, a declining non-performing loan ratio, and a reasonable level of provision coverage. Additionally, a more favorable policy environment, including liquidity release and optimized regulatory assessments, has contributed to the sector's growth [3][14]. Future Outlook - Looking ahead to 2025, East Asia Securities anticipates that the banking sector will continue to perform well, driven by the influx of medium- to long-term capital and the increasing value of index-based investments. The downward trend in interest rates is expected to enhance the appeal of high-dividend stocks, while counter-cyclical policies will gradually show their effectiveness [3][15].