Core Viewpoint - The banking sector, particularly the Bank AH Preferred ETF (517900), is experiencing a significant upward trend, indicating a potential acceleration phase in its growth trajectory [1]. Group 1: Historical Performance - Ten years ago, only five out of 31 Shenwan primary industries achieved positive returns, with the Bank AH Total Return Index rising by 127%, outperforming all other sectors [2][3]. - The Bank AH (Total) index recorded a growth of approximately 126.96% over the specified period, significantly higher than other sectors such as Food & Beverage (107.28%) and Household Appliances (28.98%) [3]. Group 2: Investment Drivers - High Dividend Strategy: The Bank AH index has a dividend yield of 6.51% as of the end of May, with individual banks like China Construction Bank at 6.56% and Jiangsu Bank at 7.46%, attracting long-term funds seeking stable cash flow [4]. - Policy Support: Recent policies, including interest rate cuts and measures to guide long-term funds into the market, have alleviated operational pressures on banks and boosted market confidence [5]. - Defensive Attributes: The banking sector's low valuation and high dividend yield provide a safety net amid increased market volatility and low risk appetite, making it an attractive option for investors seeking stability [6]. Group 3: ETF Performance - The Bank AH Preferred ETF (517900) has seen its share increase by over 256% this year, reflecting strong investor confidence [7]. - The ETF's strategy involves actively rotating between A-shares and H-shares to capture undervalued quality bank stocks, aiming for superior risk-return ratios [6].

Core Viewpoint - The banking sector, particularly the Bank ETF Preferred (SH517900), has shown strong performance, reaching historical highs and attracting significant capital due to its stability and high dividend yield compared to other investment options [1][3]. Group 1: Performance and Growth - The Bank ETF Preferred (517900) has experienced a 147% growth in scale year-to-date, making it the top performer among its peers [1]. - The banking sector has been resilient, with the Bank ETF Preferred achieving consecutive historical highs over three trading days [1]. Group 2: Market Dynamics - The rapid rotation in the A-share market has led investors to favor stable banking assets, as evidenced by the performance of the Bank ETF Preferred [3]. - The continuous decline in risk-free interest rates, with the current ten-year government bond yield at approximately 1.66%, enhances the attractiveness of bank stocks, which have a dividend yield of 6.51%, nearly three times higher than the bond yield [4]. Group 3: Institutional Investment - Insurance capital has shown a particular preference for bank stocks, with 15 instances of stake acquisitions this year, surpassing the total from the previous nine months, and eight of these targeting bank stocks [5]. - The investment strategy of the Bank ETF Preferred, which dynamically captures valuation differences between A-shares and H-shares, has proven effective, with the Bank AH Index outperforming the CSI Bank Index by nearly 13% since early last year [5]. Group 4: Strategy and Returns - The Bank AH Index employs a rotation mechanism that switches investments between A-shares and H-shares based on valuation discrepancies, aiming to achieve excess returns [5]. - Since the launch of the Bank AH Index on December 6, 2017, it has outperformed the CSI Bank Total Return Index by over 23% [5].

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].