Ping An Securities·2025-11-04 07:43Investment Rating - The report maintains an "Outperform" rating for the banking sector [1] Core Insights - The banking sector has seen a decline in active fund holdings, reaching the lowest level since 2021, with a decrease of 1.58 percentage points to 1.03% in the third quarter of 2025 [3][4] - Passive funds have increased significantly, with a total scale of 5.23 trillion, up approximately 992.5 billion from the second quarter, making them the main source of incremental funds for the banking sector [3][10] - Despite the overall decline in holdings, certain banks like Minsheng Bank and Ningbo Bank have seen an increase in their holdings [3][12] Summary by Sections Fund Holdings Situation - Active fund holdings in the banking sector have decreased to a low of 1.03%, down 1.58 percentage points from the previous quarter, indicating a significant underweight compared to the sector's market capitalization [4][5] - Passive funds have grown to 5.23 trillion, with a 1.1 percentage point increase in their share to 56%, highlighting their role as a key source of new capital for the sector [4][10] Stock Performance of Major Banks - Major state-owned banks have experienced a decline in holdings, with specific reductions noted in Industrial and Commercial Bank, Agricultural Bank, and others, reflecting a broader trend of reduced preference for bank stocks [7][12] - Smaller banks have also seen notable declines, with banks like China Merchants Bank and Jiangsu Bank showing significant reductions in their holdings [7][12] Shareholder Dynamics - Insurance companies have continued to increase their stakes in banks, indicating a sustained interest from long-term investors in the banking sector's dividend attributes [16][18] - The report notes that several banks have seen new entries into their top ten shareholders, further emphasizing the interest from institutional investors [16][17] Market Trends and Recommendations - The report suggests that the changing structure of fund flows is a critical factor in the valuation recovery of the banking sector, with passive index expansion providing stable inflows [3][10] - It recommends focusing on banks with high dividend yields and potential for long-term capital inflows, particularly in the A-share and Hong Kong markets [3][10]