Orient Securities·2025-05-12 10:46Group 1 - The report highlights that the implementation of a loose monetary policy, coupled with fiscal reforms and potential further reductions in insurance premium rates, is expected to lead to excess returns for banks [1][2][9] - The current phase of intensive policy implementation for stable growth is anticipated to have a profound impact on the banking sector's fundamentals in 2025, with increased fiscal policy support expected to boost social financing and credit, benefiting cyclical stocks [2][9] - The report identifies two main investment themes: the effectiveness of low-volatility dividend strategies in a declining interest rate environment and the potential for public funds to increase their allocation to banks due to recent reforms [2][9][23] Group 2 - The report notes that the recent reforms in public funds emphasize the importance of performance benchmarks, which may drive increased allocation to previously underweighted stocks, particularly in the banking sector [23][26] - It is indicated that insurance premium rates may be further reduced in the third quarter of 2025, which could enhance the tolerance for dividend yields among insurance funds, thereby supporting absolute returns for banks [9][10] - The report suggests that banks are currently underrepresented in public fund portfolios, with significant potential for increased capital inflow, particularly for major banks like Industrial and Commercial Bank of China and China Merchants Bank [10][26]