Analysis of China Merchants Bank (600036.SH) - A Hot Stock: Oversold to a 60-Day Low, Record-High Dividend Rate Attracts Attention

China Merchants Bank has been weakening recently. Its share price touched a 60-day low on January 22, 2026, closing at RMB 37.85, with a 1.02% drop on the day [0][1]. Since the start of this week, the share price has declined all the way from about RMB 41.3 at the beginning of the week, with a cumulative drop of 6.25%. As of January 16, it once hit a one-year low of RMB 38.65 [2]. This deep correction has made China Merchants Bank’s valuation advantage increasingly prominent, with its P/B ratio dropping to about 0.83x, which is in the bottom range of historical valuation percentiles, leaving limited downside space.

From a technical perspective, the share price has continued to decline along the 5-day moving average, clearly in a downward channel. Notably, the trading volume on January 22 reached 1.8775 million lots, an increase of 54% compared to the previous trading day, indicating that some funds have started picking up shares at low levels [1]. Meanwhile, the RSI indicator may have entered the oversold zone, suggesting potential for a technical rebound.

When the share price fell to around RMB 38.5, China Merchants Bank’s dividend rate hit a record high of about 5.2% [3]. This dividend rate far exceeds bank deposit rates and government bond yields, and is significantly attractive to conservative funds pursuing absolute returns. As the most profitable joint-stock commercial bank in China, China Merchants Bank maintains an industry-leading ROE of around 15%, but its current P/B ratio is only about 0.89x [3]. This combination of “high profitability, low valuation” is rare in history, attracting the attention of value investors.

Despite the continuous decline in share price, margin trading funds have shown a continuous inflow trend: on January 22, the single-day net purchase of margin trading reached RMB 211 million, ranking 16th on that day [4]; the cumulative net purchase in the recent 3 trading days reached RMB 408 million; in the recent 20 trading days, there have been net margin trading purchases in 17 trading days [4]. As of January 22, China Merchants Bank’s margin trading balance reached RMB 13.074 billion, and the short selling balance was 741,700 shares [4]. The continuous increase in margin trading balance indicates that long-term funds recognize the current valuation level.

Capital flow data shows obvious divergence in market funds. On January 20, main capital had a net purchase of RMB 142 million, accounting for 3.28% of the total turnover [5]. However, on January 21, main capital turned to a net outflow of RMB 106 million, while retail capital had a net inflow of RMB 667 million on the same day [6]. In the previous 10 trading days, the cumulative net outflow of main capital exceeded RMB 5.162 billion, but the margin trading balance increased by RMB 2.059 billion during the same period [1], indicating obvious game characteristics between main capital and margin trading funds.

From the perspective of institutional holdings, the latest disclosed data of Tianhong CSI Bank ETF (515290) shows that China Merchants Bank is its largest holding stock, with a shareholding ratio of 14.71% [7]. On January 22, the share of this ETF increased by 36 million units, with a capital net inflow of RMB 29.7798 million [7], indicating that institutional investors still have allocation demand for the banking sector, and the core position of the banking sector as a defensive allocation has not fundamentally changed.

It should be pointed out that the decline of China Merchants Bank is not an isolated phenomenon, but part of the overall counter-trend decline of the banking sector. The SW Banking Index rose 16.2% in 2025 [3], performing well, but since the start of 2026, technology tracks such as AI and semiconductors have been strong, forming a capital siphon effect on traditional blue-chip sectors such as banking [8]. The outflow of main capital from bank stocks to technology growth sectors is the main external factor putting pressure on bank stocks recently.

As a leading joint-stock bank, China Merchants Bank has a large asset scale and maintains an industry-leading level of profitability. Its leading position in retail banking is solid, with obvious advantages in customer base, product competitiveness and service capabilities. Despite facing macroeconomic uncertainties, the asset quality of China Merchants Bank is generally controllable, and there are no signs of significant deterioration in fundamentals.

From the industry perspective, the net interest margin of commercial banks stabilized at around 1.42% in 2025, ending the continuous narrowing trend [9]. Institutions predict that the decline in net interest margin will narrow to 4 bps in 2026, and net interest income is expected to turn positive [9], which provides certain support for the fundamentals of the banking sector. As an industry leader, China Merchants Bank is expected to be the first to benefit from the stabilization of net interest margin.

Currently, China Merchants Bank’s price-to-earnings ratio (P/E ratio) is about 7.13x, and its P/B ratio is about 0.83x, which is in the bottom range of historical valuations. From a horizontal comparison perspective, this valuation level is still reasonably low in the A-share banking sector, with a relatively high safety margin. For long-term investors, the current valuation level provides a relatively sufficient cushion.

It should be noted that China Merchants Bank’s non-interest income is under certain pressure. According to public data, bank card fees in the third quarter of 2025 decreased by 17.07% year-on-year [10], reflecting the reality of pressure on the credit card business. In addition, the head of China Merchants Bank Credit Card Center was replaced on January 22 [10], indicating that the company is actively responding to business adjustments. Changes in non-interest income may have a certain impact on short-term performance.

: The share price is in a downward channel, and there is no clear signal of a stop in the decline from a technical perspective. If market sentiment continues to be sluggish, it may fall further. Attention should be paid to the strong support level in the RMB 35-36 range [1].

: Since the start of 2026, technology tracks such as AI and semiconductors have continued to be strong. If this trend continues, funds may continue to flow out of bank stocks to high-growth sectors.

: Although there are signs of stabilization in net interest margin, the subsequent trend still needs to observe the strength of economic recovery, and asset quality expectations may be affected by the economic environment.

: The decline in fee income may affect the growth of non-interest income, forming certain pressure on performance in the short term [10].

: The combination of a P/B ratio of 0.83x and a dividend rate of 5.2% provides a relatively high safety margin, with limited downside space and relatively considerable upside space.

: The continuous purchase of margin trading funds indicates that long-term funds recognize the current value, and the game between the outflow of main capital and the inflow of margin trading funds may breed opportunities.

: As a leading joint-stock bank, China Merchants Bank has industry-leading profitability, obvious advantages in retail business, and stable market competitiveness.

: The overall valuation of the banking sector is at a historical low. With the recovery of market sentiment or the improvement of macro expectations, a valuation recovery market for the sector is expected.

China Merchants Bank’s valuation provides a certain safety margin, but the short-term trend is weak. It is necessary to wait for the recovery of market sentiment and clear signals of a stop in the decline from the technical side. Currently, a left-side trading strategy is suitable, and chasing rising prices is not recommended.

include: obvious valuation advantages, with a P/B ratio of 0.83x and a dividend rate of 5.2%, sufficient safety margin; divergence in capital side, continuous purchase of margin trading funds indicates that long-term funds recognize the current value; supported by fundamentals, as a leading joint-stock bank, China Merchants Bank has industry-leading profitability; overall recovery of the banking sector is expected, institutions predict that the decline in net interest margin will narrow in 2026, and net interest income is expected to turn positive.

include: wait for technical signals of a stop in the decline and stabilization for the short-term trend; pay attention to whether the technology sector continues to attract funds regarding market style shift; pay attention to annual report performance forecasts or policy favorable factors as catalysts.

: You can wait for the share price to stabilize and break through the downward trend with heavy volume before entering, and pay attention to the effectiveness of the support level in the RMB 37-37.5 range [1].

: You can consider building positions in batches, holding for the long term to enjoy dividend income, exchanging time for space, and the current price has long-term allocation value.

: You can participate in oversold rebound games with a small position, set a stop loss (it is recommended to set it below RMB 35), and strictly control the position ratio.

Price Type	Price Range	Explanation
Short-term Support Level	RMB 37-37.5	Near the low on January 22, may form a short-term support
Strong Support Level	RMB 35-36	An important psychological level, also a recent low range
Resistance Level	RMB 39-40	A dense area of recent highs, needs heavy volume to break through
Strong Resistance Level	RMB 41-42	The 60-day moving average and the high of this week

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: This report provides information collection, analysis and market background to support decision-making. It is not investment advice, trading recommendation or financial guidance. The analysis aims to objectively present factual information, market background and risk identification, and does not provide prescriptive advice on buying, selling or holding securities. The stock market is risky, and investment needs to be cautious.