Dividend Yields Rebound Amid Stock Price Adjustments
As one of the most profitable sectors in the A-share market, banking stocks have delivered strong gains this year, with state-owned banks repeatedly hitting record highs. Wind data shows the banking index surged over 16% from its April 7 low to a peak on July 11.
However, since mid-to-late July, as major indices reached yearly highs, banking stocks underwent a notable correction. From July 11 to 28, the Wind Banking Index fell 5%, with net outflows of institutional funds totaling -2.434 billion yuan, 1.821 billion yuan, -3.197 billion yuan, 64 million yuan, and -2 million yuan over five trading days.
Among individual stocks, only Ningbo Bank and Agricultural Bank of China rose during this period, while 40 others declined—28 by over 5%, including Chongqing Bank, China Zheshang Bank, China Minsheng Bank, and Qingdao Rural Commercial Bank, which dropped more than 8%.
Changjiang Securities attributes the correction to overheated trading sentiment post-June, with valuations and dividend yields becoming less attractive after rapid gains. Recent market rotations toward higher-risk sectors also diverted funds from banks.
Amid the sector-wide decline, dividend yields for some banks have rebounded to around 5%. As of July 28, Huaxia Bank led with a 4.98% yield, followed by Ping An Bank (4.87%) and Bank of Beijing (4.85%).
Changjiang Securities notes that further corrections would enhance banks’ investment appeal: "Stable earnings and dividends drive yield recoveries during pullbacks, while market yield expectations decline, making post-adjustment valuations particularly compelling."
Despite outflows, some bank shareholders have initiated new buybacks. On July 26, Bank of Shanghai disclosed that directors and executives purchased 440,000 A-shares at 10.46–10.70 yuan/share, totaling ~4.655 million yuan. Separately, China Everbright Bank announced CITIC Financial Asset Management boosted its A/H-share holdings by 0.92% of total equity between January 20 and July 22.
