On November 6, AI technology stocks fell sharply once again, the broader market opened lower and traded in a choppy range, but banks stepped up to lift the index. The underlying index of Bank ETF Huabao (512800) rose 0.84%, with Shanghai Rural Commercial Bank leading gains at 4%, while China Construction Bank Corporation (ASX: 601939) and Suzhou Bank both climbed more than 2%. Bank of Jiangsu, Bank of Nanjing, and Ping An Bank were among the other top gainers.

With the third-quarter earnings season now wrapped up, the continued improvement in banks' operating performance has provided fundamental support for bank stock performance. Combined with the high dividend yield advantage in a low interest rate environment and the dual lows in valuation and institutional holdings, the banking sector's recovery rally is expected to continue.

Four key drivers behind the banking sector rally

First, based on the disclosed third-quarter earnings data, the sector's overall fundamentals remain relatively solid, with revenue and profit growth performing well. Second, active fund third-quarter reports show that bank holdings remain at historically low levels, indicating relatively low crowding in the sector. Third, sector valuations remain at relatively low levels, with all 42 listed banks trading below book value, and the CSI Bank Index price-to-book ratio at 0.75 times, sitting at approximately the 47th percentile since its inception. Fourth, as the year-end approaches, capital styles tend to favor defensive positioning, while insurance funds are positioning early for the new year's "good start" campaign, creating demand for high-dividend assets.

Banks stand out with their defensive attributes in a volatile capital market environment and may serve as a foundational allocation choice for portfolios. Under the combined effect of market style rebalancing and banks' own operational improvements, the banking sector is showing a relatively clear recovery trend.

Riding the momentum with both offense and defense

Bank ETF Huabao (512800) passively tracks the CSI Bank Index, with constituent stocks covering all 42 A-share listed banks. Its top ten weighted stocks bring together large-cap leaders such as Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of Communications, while also covering growth-oriented joint-stock banks and city and rural commercial banks such as China Merchants Bank, Industrial Bank, and Bank of Jiangsu. It is an efficient investment tool for tracking the overall performance of the banking sector. Off-market investors can consider the feeder fund (Class A: 240019; Class C: 006697).

Data source and fee disclosure

Data source: Shanghai and Shenzhen stock exchanges, etc. ETF fee-related disclosure: When investors subscribe or redeem fund shares, the subscription and redemption agent may charge a commission at a rate not exceeding 0.5%, which includes relevant fees charged by the stock exchange and registration institution. Feeder fund fee-related disclosure: Huabao CSI Bank ETF Feeder Fund (Class A) subscription fee rate (front-end) is 1,000 yuan per transaction for subscription amounts of 2 million yuan (inclusive) or more, 0.6% for 1 million yuan (inclusive) to 2 million yuan, and 1% for amounts below 1 million yuan; the redemption fee rate is 1.5% for holding periods of less than 7 days, 0.5% for holding periods of 7 days (inclusive) to 180 days, 0.25% for holding periods of 180 days (inclusive) to 1 year, and 0% for holding periods of 1 year (inclusive) or more; no sales service fee is charged. Huabao CSI Bank ETF Feeder Fund (Class C) does not charge subscription fees; the redemption fee rate is 1.5% for holding periods of less than 7 days, 0.5% for holding periods of 7 days (inclusive) to 30 days, and 0% for holding periods of 30 days (inclusive) or more; the sales service fee is 0.2%.

Risk disclosure

Bank ETF Huabao (512800) passively tracks the CSI Bank Index. The index's base date is December 31, 2004, and it was launched on July 15, 2013. The CSI Bank Index's returns over the past five complete calendar years are as follows: 2025, 6.79%; 2024, 34.71%; 2023, -7.27%; 2022, -8.78%; 2021, -4.41%. Its volatility over the past five complete calendar years is as follows: 2025, 14.03%; 2024, 19.34%; 2023, 13.41%; 2022, 18.56%; 2021, 18.63%. Index constituent stocks are adjusted from time to time according to the index compilation rules, and past performance does not predict future results. The index constituent stocks mentioned in this article are for illustrative purposes only. Individual stock descriptions do not constitute investment advice in any form and do not represent the holdings or trading activities of any fund managed by the manager. The risk rating of this fund as assessed by the fund manager is R3-medium risk, suitable for investors with a balanced profile (C3) or above. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only, and investors must be responsible for their own investment decisions. In addition, any views, analyses, and forecasts in this article do not constitute investment advice of any kind to readers, nor shall they bear any responsibility for direct or indirect losses arising from the use of the content herein. Fund investment involves risks. Past performance of a fund does not represent its future performance. The performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Investors should exercise caution when investing in funds. MACD golden cross signals have formed, and these stocks are performing well!