Recently, the Hong Kong stock market has fallen into a similar situation to the A-share market, also undergoing fluctuations and adjustments. However, there is a category of Hong Kong stocks that appears particularly resistant to declines, and occasionally even strengthens against the trend. Can you guess which category of assets it is?

The Defensive Attribute Stands Out

It is precisely the high-dividend assets in the Hong Kong stock market. It is not surprising that they are resistant to declines, as strong defensive attributes have always been the label of high-dividend assets. Moreover, dividends often perform better when the economy and fundamentals face a lot of uncertainty.

Compared to A-shares, the Hong Kong stock market is more sensitive to overseas liquidity. Whether it's Russia and Ukraine or Palestine and Israel, the current global geopolitical landscape is still very complex. Against the backdrop of domestic and international uncertainties that disturb the market and are difficult to eliminate in the short term, high-probability investments may continue to be the consensus of many funds for a period of time, and the Hong Kong stock market is no exception. For those who allocate Hong Kong stocks in their investment portfolios, high-dividend Hong Kong stocks are also very suitable as a base position choice.

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Hong Kong High-Dividend Assets

In the current market, the corresponding indexes are the Hang Seng China Enterprises High Dividend Yield Index and the CSI Hong Kong Stock Connect Central Enterprises Dividend Index. Both of these indexes focus on high-dividend assets in the Hong Kong stock market. The ETFs corresponding to these two indexes are Hang Seng Dividend ETF and Hong Kong Central Enterprises Dividend ETF, respectively. Both indexes consist of 50 components.

So, what is the difference between them? The names of the indexes have already revealed the most important difference between the two: the former's stock selection scope is "Mainland Enterprises," while the latter is "Hong Kong Stock Connect Central Enterprises." The difference in the stock selection pool leads to a significant difference in the components of the two indexes, with 23 overlapping stocks and completely different top five weighted stocks.

The difference in components is further reflected in the industry distribution of the two indexes. The first major weighted industry is the same for both, which is the financial industry, while the second and third major weighted industries show significant differences.Additionally, there is a more core data point to consider: the dividend yield. Referring to the data from 2023, the two indices have the following dividend yields: 7.81% (Hang Seng China Enterprises High Dividend Yield Index) and 8.04% (CSI Hong Kong Stock Connect Central Enterprises Dividend Index), both of which are significantly higher than the Hang Seng Index's dividend yield of 4.2%.

How to choose?

In summary, although both indices focus on high dividend assets in Hong Kong stocks, they each have their own emphasis. If you prefer a stock selection range that is not limited to "China-owned" companies and aims for a more diversified industry distribution, you can pay attention to the Hang Seng China Enterprises High Dividend Yield Index, with the corresponding ETF being the Hang Seng Dividend ETF. If you are more optimistic about the opportunities in Hong Kong stocks with mid-to-high dividend central enterprises, you can focus on the Hong Kong Stock Connect Central Enterprises Dividend Index, with the corresponding ETF being the Hong Kong Central Enterprises Dividend ETF.

Returning to the market situation, in the short term, the global capital demand may not be for making more money but still focuses more on risk aversion. Whether it's a recession in the U.S. economy or the yen raising interest rates while the dollar lowers them, the impact of the retreat of carry trade funds is likely not over. In such a situation, it is beneficial for Hong Kong stocks, which have been undervalued for a long time. From historical experience, after a clear overbought situation in the short term, the market usually fluctuates or even corrects, but from this year's perspective, liquidity for Hong Kong stocks can be more optimistic.

In terms of specific sectors, in addition to high dividend yield assets, you can also pay more attention to the internet, technology, and biopharmaceutical sectors. They have a certain scarcity compared to A-shares and are in line with the direction of China's economic transformation!

Class A funds charge a one-time subscription fee at the time of purchase, with no sales service fee; Class C has no subscription fee but charges a sales service fee. Due to differences in fee collection and establishment time, etc., there may be significant differences in long-term performance. For details, please refer to the product's regular reports.

T+0 Special Risk Warning: The above ETFs are cross-border ETFs, implementing a T+0 reverse transaction mechanism (i.e., bought on the same day, they can be sold on the same day before settlement), which shortens the fund operation cycle and may bring short-term volatility risks.