[Shenwan Bank Zheng Qingming Team] Why Did We Turn Strongly Bullish on Banks as Early as June?

English summary

# Grasp the long-term narrative of banks: Banks' share prices hitting new highs is an inevitable choice for seeking certain returns in a low-interest-rate environment. # Focus on forward-looking signals of turning points: The long-term cumulative returns of banks and growth stocks have been consistent, implying that any phase of extreme one-sidedness will inevitably see a reversal turning point (signal clear in June). # Market has an expectation gap on banks: 1) No more significant rate cuts = trend inflection point in EPS; 2) Asset quality bottom has hard constraints. # How to select stocks: Growth-oriented city commercial banks (focus on #Bank of Suzhou#) + state-owned large banks with stable performance (certain revenue leadership).