Core Viewpoint - The banking sector has seen significant increases in public fund holdings, with a total market value surpassing 200 billion yuan, indicating strong investor interest and potential for further growth [1][2][3]. Group 1: Public Fund Holdings - As of the end of Q2, public funds held a total market value of approximately 2054 billion yuan in bank stocks, representing a 27% increase from the previous quarter [1][2]. - The proportion of active equity funds holding bank stocks rose to 4.88%, the highest since Q1 2021, with significant increases in holdings of regional banks [1][2][3]. - Active equity funds increased their holdings in bank stocks by 26.7%, while passive index funds saw a 27.7% rise, reflecting both stock price increases and additional purchases [2][3]. Group 2: Market Performance - The A-share banking sector's market value exceeded 10 trillion yuan for the first time, increasing by approximately 1.5 trillion yuan in Q2 [3]. - The China Securities Banking Index rose nearly 11% in Q2, contributing significantly to the overall gains in the banking sector [2][3]. - The concentration of holdings among the top bank stocks decreased, indicating a diversification in investment choices [7]. Group 3: Investment Trends - There is a notable shift in public fund allocations from state-owned banks to joint-stock and city commercial banks, driven by improved fundamentals and lower valuations [6][7]. - Major banks favored by institutions include China Merchants Bank, Minsheng Bank, and Jiangsu Bank, with significant increases in their holdings [6][7]. - Active funds increased their positions in the banking sector by approximately 71 billion yuan, with notable reductions in state-owned banks [6][7]. Group 4: Future Outlook - Recent adjustments in bank stocks have raised concerns, but the stability of earnings and dividends is expected to support long-term investment [8][9]. - Analysts predict that the next wave of growth for bank stocks may begin in late August, coinciding with the earnings reporting period [8][9]. - The focus for future investments will likely remain on regional advantages and high dividend yields, particularly for quality city and rural commercial banks [9][10].