As the year draws to a close, the stock market is witnessing an increase in volatility following a rapid upturn, leading to greater divergence among investorsThe market currently faces an array of uncertainties, primarily stemming from domestic economic pressures and external disturbancesIn such an unpredictable environment, the quest for relatively stable investment opportunities translates into vibrant discussions among investors, particularly regarding dividend assets that display robust defensive characteristics while providing stable yield returns.

Dividend assets typically denote stocks that consistently distribute high dividendsBy investing in these assets, investors anticipate earning steady regular dividend returns fueled by a company's resilient profitabilityMoreover, as the market recalibrates its perception of a company's value, there lies the potential to reap rewards from an uplift in valuation

The proliferation of dividends among publicly traded companies manifests a long-term trend, accentuating the allocation value of dividend assets even further.

A review of historical data reveals that, in the context of economic recovery intertwined with internal and external uncertainties, dividend assets that exhibit solid fundamentals, stable operational conditions, and ample safety margins often stand out, gaining significant excess returns amid fluctuating market conditionsFor instance, consider the CSI All Dividend Yield Index (H00922.CSI) and the Hang Seng High Dividend Yield Index (HSI52.HI). As indicated by Wind, as of December 23, 2024, these indices recorded an impressive rate of growth over three years at 24.45% and 21.61% respectivelyThis significantly outperforms the performance of the CSI 300 Total Return, which fell by -13.47%, and the Hang Seng Total Return, which declined by -3.36% during the same period.

When examining the rebound trajectory of the Hong Kong stock market this year, the performance of dividend assets stands out distinctly

According to Wind, by December 23, the CSI Hong Kong Stock Connect High Dividend Yield Total Return Index (in RMB, H20915.CSI) surged by 32.67% year-to-date, not only notably surpassing the corresponding yield of the Hang Seng Index, but also exceeding the performance of the CSI All Dividend Yield Index which only saw a 16.49% gain during the same periodA longer-term analysis further validates this excellence with the index recording gains of 34.92%, 47.27%, and 62.97% over the past year, two years, and three years respectively—consistently outpacing both the Hang Seng Total Return Index and the CSI All Dividend Yield IndexSuch strong performance of the Hong Kong dividend theme index underlines the significant allocation value of dividend assets in the stock market, as stable dividend-yielding options gradually become the focal point for investors in the current complex market landscape.

Interestingly, when juxtaposed with the A-share market and major global indices, the current Hong Kong stock market offers a higher dividend yield and lower valuations, presenting a more attractive investment proposition

Wind data shows that by December 23, 2024, the dividend yield of the Hang Seng Index stood at approximately 3.88%, in contrast to the 2.97% yield of the CSI 300 and 1.21% of the S&P 500. Additionally, in terms of valuation, the Hang Seng Index’s price-to-earnings (TTM) ratio is at 9.09 times, lying at the 21.26 percentile of the past decade, indicating that the market remains relatively undervalued both on a horizontal and vertical scaleSimultaneously, the current AH premium index has reached a decade high of 143, signifying that Hong Kong stocks are still appealing when compared to A-sharesDespite recent turbulence and adjustments in the Hong Kong market, the enthusiasm of mainland capital flowing into Hong Kong remains unwaveringSince October, net purchases of Hong Kong stocks by mainland investors have exceeded HKD 256.6 billionAnnual data reveals that net purchases this year have surpassed HKD 718.1 billion, doubling last year’s figure

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Notably, in November, net purchases reached HKD 116 billion—one of the highest monthly figures in recent yearsThese data points collectively suggest that mainland investors maintain robust confidence in the investment potential and value of Hong Kong stocks.

The national push for dividend reforms and an increased emphasis on investor returns aligns closely with dividend strategies, thereby enhancing their future visibilityOver the long term, dividend theme indices are poised to deliver considerable excess advantages compared to broad market indicesHaving experienced years of bottom consolidation, the Hong Kong stock market is gradually accumulating favorable factors, and a market recovery seems plausibleCurrently, dividend investments on Hong Kong stocks show a commendable price-performance ratio in terms of valuation and yieldsFor investors favorable towards dividend strategies, it becomes evident that dividend assets in the Hong Kong market now present a more attractive investment opportunity

Recently, the Hang Seng Qianhai Hong Kong Stock Connect Value Mixed Fund has begun issuance, focusing its investments on Hong Kong Stock Connect securities, allocating at least 80% of non-cash fund assets to select leading companies in Hong Kong, aiming to unearth stocks with high dividend characteristics while capitalizing on both the dividend and valuation recovery opportunities.

Xing Cheng, the proposed fund manager for the Hang Seng Qianhai Hong Kong Stock Connect Value Mixed Fund, believes that the current valuation advantage in the Hong Kong market is pronouncedThe market may continue to benefit from a positive shift in policy thinking alongside gradual improvements in external liquidityWithin the turmoil, the possibility of long-term value in dividend assets remains evident: first, amid a downward movement of domestic interest rates, the relative attractiveness of high-dividend assets rises

As domestic institutional funds, including pensions and insurance, become long-term oriented, their investment into dividend assets is expected to increase gently; the yield of Hong Kong dividend assets exceeding that of A-shares may contribute to this allureSecond, having languished for years, Hong Kong stocks, buoyed by improving fundamentals and softened liquidity, are expected to enjoy an ongoing recoveryIn addition to the inherent dividend earnings, there are prospects to benefit from recovery in valuationsThird, should the dividend tax exemption under the Hong Kong Stock Connect materialize, it would further spurt enthusiasm among mainland investors for Hong Kong, particularly in high-dividend sectors, consequently fueling a further uptick in dividend assets.

For ordinary investors focusing on the Hong Kong stock dividend investment direction, venturing into public funds for investing in Hong Kong stocks proves more efficient and less risky than direct personal investment