A-Share Indices Fall as Banking Sector Defies Downtrend; ICBC and CCB Hit Record Highs

On July 30, A-share markets underwent volatile adjustments, with the Shanghai Composite Index falling 0.62%, the Shenzhen Component Index dropping 2.73%, the ChiNext Index declining 3.97%, and the STAR 50 Index slumping 5.38%. The market exhibited a rotation from high-growth to low-valuation sectors, with communication equipment, electronics, and semiconductors among the worst performers, while dividend-yielding defensive sectors gained. The banking sector stood out as the day's highlight, with all 42 listed banks posting gains. ICBC and CCB both hit record highs, reaching total market capitalizations of RMB 2.77 trillion and RMB 2.18 trillion, respectively. Since the beginning of July, the total market value of the banking sector has recovered by approximately RMB 1.89 trillion.

As of July 30, the total market capitalization of A-share banking stocks stood at RMB 16.06 trillion, a record high, up about RMB 1.89 trillion or 13.34% from the start of the month, leading all 31 Shenwan primary industries in value added. During the same period, the market cap of the petrochemical sector increased by about RMB 845.9 billion, and the food and beverage sector rose by about RMB 402.9 billion. In contrast, the technology growth track experienced sharp corrections, with the electronics sector losing RMB 5.69 trillion in market value, falling from RMB 27.16 trillion to RMB 21.47 trillion. The communication sector shrank by RMB 1.63 trillion, and the computer sector by RMB 430 billion. Combined with declines in power equipment and machinery sectors, total market value evaporation in the technology growth track exceeded RMB 10 trillion.

Capital flows confirmed the style shift. The banking sector ranked first among 31 Shenwan primary industries in net main capital inflows over the past five trading days, reaching RMB 12.523 billion. Among individual stocks, ICBC and Agricultural Bank of China (ABC) saw net main inflows of RMB 1.176 billion and RMB 1.157 billion, respectively, over the period. Industrial Bank, Bank of Communications (BoCom), Ping An Bank, China Merchants Bank (CMB), and CCB each recorded net main inflows above RMB 500 million. In terms of individual stock performance, Shanghai Pudong Development Bank (SPDB) and Shanghai Rural Commercial Bank rose 4.63% and 4.56%, respectively, while Huaxia Bank, Chongqing Rural Commercial Bank (CQRCB), BoCom, CCB, and Bank of Ningbo all closed up over 3%. On a monthly basis through July 30, Bank of Suzhou and Qingdao Rural Commercial Bank rose 23.28% and 21.37%, respectively, while 15 stocks including Bank of Nanjing, SPDB, Zhangjiagang Bank, CMB, ABC, and CCB posted gains exceeding 15%.

Several listed banks released first-half performance previews for 2026, showing steady growth. Bank of Chongqing achieved first-half operating revenue of RMB 8.486 billion, up 10.8% year-on-year, and net profit attributable to shareholders of RMB 3.518 billion, up 10.28%. CQRCB reported first-half operating revenue of RMB 15.892 billion, up 7.81%, and net profit attributable of RMB 8.168 billion, up 6.09%, with a non-performing loan ratio of 1.05%, down 0.03 percentage points from end-2025. SPDB disclosed its main operating figures for the first half, with total loans up 2.88% from end-2025 and total deposits up 5.05%.

Regarding institutional holdings, based on second-quarter fund holdings data, active public funds' allocation to banking stocks fell 0.88 percentage points quarter-on-quarter to 1.10%, the lowest since 2019, significantly easing trading pressure. Passive fund holdings also declined, while northbound capital continued modest outflows and southbound capital sustained inflows. Since the third quarter began, broad-based ETFs have shown a gradual return trend. Market risk appetite continued to decline, boosting defensive dividend assets like banks, whose dividend yield attractiveness has notably recovered after nearly a year of adjustment.