Weekly Wrap: Big-5 H shares hit new highs; weak PMI prompts policy support

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Banks - China

Weekly Wrap: Big-5 H shares hit new

highs; weak PMI prompts policy support

Industry Overview

Sector performance

H-share bank sector was up 4.7% (vs HSI +3.7%). ABC (+7.3%) outperformed, while

CEB (+1.3%) underperformed. Sector P/B: 0.56x, P/E: 6.1x, dividend yield: 5.1%. A-share

bank sector increased 3.0% (vs CSI300 -1.3%), with BOSZ (+5.9%) leading and BONB (0.4%) lagging. Sector P/B: 0.67x, P/E: 7.2x, dividend yield: 4.3%. Southbound investors

net bought BOC, net sold CQRB most among China banks.

Weekly Market Review

Macro: The July Politburo meeting called for timely and practical incremental policies to

stabilize property, defuse debt risks and deepen financial reform amid weaker activity.

July manufacturing, non-manufacturing and composite PMIs fell 1.1ppt, 1.2ppt and

1.3ppt MoM to 49.2%, 49.0% and 49.3%, respectively. However, industrial profits rose

18.7% YoY in 1H26, versus a 1.8% decline in 1H25. GDP growth diverged across

provinces, with Zhejiang, Jiangsu and Sichuan expanding 5.7%, 5.2% and 4.8%,

respectively, all above the 4.7% national average. August local government bond

issuance is set to peak at c.RMB1tn, alongside NDRC officer’s call to stabilize

investment, SASAC’s push for a new round of SOE reforms and tighter tax scrutiny of

offshore trusts. Monetary: Outstanding RMB loans grew 5.2% YoY by 2Q26, slowing

from 7.1% a year earlier, while property development loans fell 8.5%, versus 0.3%

growth, and mortgages declined 3.8%, versus a 0.1% decline. Financials: Amid weak

credit demand, city commercial banks joined the DR-based loan-pricing pilot, while

funding competition intensified as some state-owned banks relaunched five-year CDs at

1.60%. Regulators are considering new supervisory guidelines for loan-facilitation

businesses. From August 1, lenders must disclose comprehensive personal-loan

financing costs, while private banks have cut more than 100 loan-facilitation partners as

the 24% rate cap squeezes profitability. Bank WMPs reached RMB33.66tn at end-June

2026, up 1.11% YTD, with an average annualized return of 2%; while bank-issued WM

balance fell 22% YoY.…