CITIC Securities: In the second half of the year, banks are entering a fundamental recovery channel, and industry valuation improvement is expected.

According to the research report of CITIC Securities, the financial data for May shows that the current demand for entity financing is relatively weak, and the ample funds in the financial system help the performance of financial assets. Since 2026, there has been a large net redemption of broad-based ETFs, leading to continuous net selling in the bank sector. As of June 12, CITIC Securities estimated that the 18 key broad-based ETFs related to the banking sector held about RMB 50 billion in bank stocks, a decrease of over 70% compared to the end of 2025. CITIC Securities believes that the peak impact of ETF net redemptions on the banking sector has passed, and the subsequent impact is relatively limited. Looking ahead to the second half of the year, as banks enter a fundamental recovery channel, industry valuations are expected to rise, and the sustained attractiveness of dividend yields to risk-averse funds can be expected, with a predictably strong absolute return space.