Core Viewpoint - The article discusses the impact of the recent interest rate cuts in China, particularly the first drop of the one-year deposit rate below 1%, marking the entry into a low-interest era. Despite this, bank stocks have surged, raising questions about their investment value in the current environment [3][5]. Summary by Sections Interest Rate Environment - The recent interest rate cuts have led to a significant decline in deposit rates, with the one-year deposit rate falling below 1%, indicating a shift to a low-interest environment [3]. - The bank AH index has a high dividend yield of 7.3%, attracting investor interest despite the low-interest rates [3][10]. Dividend Yield and Valuation - There is a common belief that dividend yields should be directly linked to risk-free rates. However, the article argues that this assumption is flawed, as evidenced by the disparity between dividend yields and the risk-free rates of government bonds [5][13]. - The article highlights that the bank AH index's dividend yield significantly exceeds the risk-free rate, suggesting that it is not overvalued even in a low-interest environment [5][10]. Bank AH Index Performance - The bank AH index has shown strong performance, with a cumulative increase of nearly three times over the past 12 years and an annualized return exceeding 12%. It also has the lowest maximum drawdown among related indices [7][9]. - The index employs a dynamic adjustment strategy, switching between A-shares and H-shares based on their performance, effectively implementing an arbitrage strategy [9][10]. Market Valuation Metrics - The article introduces a valuation metric called "市赚率" (Market Earnings Rate), which is calculated as the price-to-earnings ratio divided by the return on equity. This metric is used to assess the attractiveness of bank stocks [11][12]. - In a low-interest environment, the reasonable valuation range for the market earnings rate is suggested to be between 1.1PR and 1.4PR, indicating a higher tolerance for valuations [13][14]. Investment Strategy - The article recommends focusing on industry leaders for valuation, using examples like 招商银行 (China Merchants Bank) as a benchmark for the banking sector [15][16]. - The adjusted market earnings rate for 招商银行 is calculated to be 0.76PR, suggesting that it is within a comfortable investment range in the current low-interest environment [16][17].