Last week, bank stocks strengthened comprehensively, and driven by the four major banks continuously reaching historical highs, the Sector Index rose for five consecutive weeks, successfully breaking through the high point of October 8, resetting the historical record, with a cumulative increase of 46.23% this year, marking the largest annual increase in nearly a decade.

Sealand stated that historically, bank stocks exhibit post-cycle characteristics and perform well during phases of intensified counter-cyclical policies and improved economic expectations. In recent years, high dividend strategies have received continuous market attention, among which long-end interest rate declines are an important factor driving high dividend asset price performance.

The high dividends, low volatility, and robust Operating style of bank stocks make them a 'safe haven' for funds during market turbulence. Especially at the end of the year and the beginning of the year, the increased allocation of insurance funds further reinforces the attractiveness of bank stocks.

CITIC SEC pointed out that the bank sector performed well in December. Our calculated data shows that on the sector level, passive fund accumulation is an important driving force, with active financing buying and relatively stable marginal trading levels; on the individual stock level, banks with sector excess returns have outperformed the industry in both passive funds' net buying and financing buying dimensions. Recently, bank stocks have performed well, and in addition to the incremental funds indicated by the aforementioned high-frequency funds, there is also a demand for allocation from absolute yield funds as we approach the mid-term dividend season for banks, while relative yield funds seek to adjust industry structure, both of which jointly enhance the allocation intensity in the banking sector.

The current synergy of the economy, policies, and funding points to the high certainty returns of the bank sector, and it is expected that continued valuation upward movement remains the direction with the least resistance.

According to the Zhitong Finance APP, Zhongtai issued a Research Report looking forward to the bank sector investment strategy for 2025. The report states that the economic inertia continues in the first half of the year, and high dividend defensive varieties are still dominant; at the same time, combining the current market preference enhancement + the future economic expectations with differences can derive the following three clues: ① high dividend banks; ② urban commercial banks with geographical advantages and strong certainty; ③ core assets. In the second half of the year, considering the effects of policy implementation: ① if the policy clues are clear and the policy effects are visible, look for varieties that align with policy themes; ② if the economic recovery situation is still below expectations, return to high dividend defensive varieties.

Related Hong Kong stocks in the domestic banking Sector:

China Construction Bank Corporation (00939), CM BANK (03968), Industrial And Commercial Bank Of China (01398), Postal Savings Bank Of China (01658), CEB BANK (06818), Agricultural Bank Of China (01288), Bank Of China (03988), etc.