Huatai Securities: Paying attention to the new logic of bank allocation under fund reform.

Huatai Securities believes that the implementation of public offering reform is expected to drive the valuation of bank stocks. The China Securities Regulatory Commission recently issued the "Action Plan for Promoting the High-Quality Development of Public Funds," significantly strengthening the constraints of performance benchmarks. It is expected that future fund allocations may move closer to performance benchmarks. In the first quarter of 2025, actively managed equity funds are significantly underweight in banks, with a deviation of nearly 10% from the Shanghai and Shenzhen 300 Index. Under the drive of reform, there may be significant room for increased allocations. Recently, a package of policies has been implemented to drive economic recovery. In addition, passive funds continue to expand, and insurance funds are entering the market at an accelerated rate. It is expected that continuous inflows of incremental funds will further support the sector's market trend. Stocks to watch: 1) Banks with low allocations in public offerings in the first quarter of 2025; 2) Stable large banks still have investment value; 3) High-quality stocks.