Core Viewpoint - The banking sector is experiencing a significant decline, with major banks seeing substantial drops in their stock prices due to multiple factors including regulatory changes and market sentiment [1][4][5]. Group 1: Market Performance - Major banks such as CITIC Bank and Changsha Bank have seen stock declines exceeding 3%, while larger banks like ICBC, CCB, and BOC have dropped over 2% [1]. - Since mid-July, the banking sector has been in a continuous downturn, with the Shenwan Banking Index falling over 8% from July 11 to August 14, particularly affecting city commercial banks which have seen declines over 10% [3]. Group 2: Factors Influencing Decline - Three main factors are contributing to the decline in bank stocks: new fiscal policies for personal consumption loans, regulatory measures against low-level price wars, and short-term selling pressure from dividend-related trading strategies [4]. - Recent announcements of shareholder reductions in banks like Hangzhou Bank and Qilu Bank may also be impacting market sentiment, although it is suggested that institutional investors are not likely to exit the market easily [4]. Group 3: Valuation and Investment Outlook - Despite the current downturn, the banking sector is still seen as attractive due to its high dividend yields, with the banking sector's dividend yield at 3.92% and the AH index at 4.32% as of August 14 [5]. - The banking sector is currently undervalued, with a price-to-book (PB) ratio of 0.61x, indicating a defensive attribute and potential for valuation recovery [5][6]. - There is a significant "under-allocation" of funds in the banking sector, with a gap of 7.07% between the theoretical allocation and actual holdings by active funds, suggesting that the mid-term outlook for bank stocks remains positive [6].