The "national team" has taken action again!

On June 19th, according to the official website of China Reform Holdings Corporation Limited, China Reform Investment subscribed to the first batch of shares of the CSI Central State-Owned Enterprises Dividend Index (CSIDIV) ETF under the Honglietf program through an affiliated company, China Reform Capital Investment.

This move sends a strong bullish signal for the long-term value of state-owned enterprises listed on HKEX, while also demonstrating the responsibility of state-owned capital operation companies in maintaining the market value of central enterprises and enhancing the pricing power of state-owned enterprises listed on HKEX.

On December 1st of last year, China Guoxin under Guoxin Investment increased its holdings of CSI Guoxin Central State-owned Enterprises Technology Leading Index ETF and CSI Central State-owned Enterprises Innovation Drive Index ETF, and will continue to increase holdings in the future. On the same day, the Central State-owned Enterprises Technology Leading Index and the Central State-owned Enterprises Innovation Drive Index closed up 1.31% and 0.46%, respectively.

So, will Guoxin's investment this time lead the dividend sector's market trend again?

State-owned enterprises take action again.

Today, China Guoxin Holding Limited (referred to as Guoxin Holding) official website suddenly released a news that Guoxin Investment, a subsidiary of China National Innovation Investment Group, partnered with top market institutions such as GF Fund, Southern Fund, and Invesco Great Wall Fund to launch the CSI Guoxin Hong Kong Stock Connect Central State-owned Enterprises Dividend ETF. Guoxin Investment subscribed to the first batch of ETF shares on June 19th, conveying a positive signal of strong confidence in the long-term value of Hong Kong-listed central state-owned enterprises, and demonstrating its responsibility and commitment to maintain the market value of the central state-owned enterprises and improve the pricing power of Hong Kong-listed central state-owned enterprises.

It is reported that the CSI Guoxin Hong Kong Stock Connect Central State-owned Enterprises Dividend Index selects Hong Kong-listed central state-owned enterprise listed companies that can reflect the value and characteristics of central state-owned enterprises, with outstanding industry status, stable operation, abundant cash flow, and relatively high dividend levels as constituent stocks.

Guoxin Holding stated that in the context of the continuous deepening of the reform of state-owned enterprises and the policy orientation of the new "Nine Articles" to strengthen the cash dividend of listed companies, the index has long-term investment value. At the same time, by cooperating with professional institutions to establish multi-currency ETF products in the domestic and Hong Kong markets, it promotes the synergy and linkage between domestic and international capital markets and guides more international capital and industrial resources to efficiently gather in high-quality Hong Kong-listed central state-owned enterprises.

On December 1st of last year, China Guoxin under Guoxin Investment increased its holdings of CSI Guoxin Central State-owned Enterprises Technology Leading Index ETF and CSI Central State-owned Enterprises Innovation Drive Index ETF, and will continue to increase holdings in the future. On the same day, the Central State-owned Enterprises Technology Leading Index and the Central State-owned Enterprises Innovation Drive Index closed up 1.31% and 0.46%, respectively.

At that time, Guoxin Investment stated that it has always taken serving national strategy, central enterprises and technological innovation as its original mission, and actively innovated equity operation methods. In the context of the current market downturn, by increasing holdings of the Central State-owned Enterprises Technology Leading and Central State-owned Enterprises Innovation Drive Index ETFs, it has conveyed a strong signal that it is confident in the stable long-term development trend of the Chinese economy and the long-term investment value of technological innovation by central enterprises.

How long can the dividend sector last?

Since the market downturn on May 20th, the excess returns of the dividend strategy have strengthened again, and dividend-related indexes have generally achieved excess returns of around 3 points, continuing the upward trend of excess returns since 2021. Driven by the impressive performance of the dividend strategy, the issuance of related fund products has reached a climax. Since the beginning of the year, the number of new public funds with the words "dividend" or "high dividend" in their names is 47, accounting for 7.7% of all new funds issued, which is a significant increase compared to previous years.

In addition, Wind data shows that as of May 31st, the CSI Guoxin Hong Kong Stock Connect Central State-owned Enterprises Dividend Index has risen nearly 31% in the past six months, which is significantly higher than the 6% and 13% increases of the Hang Seng Index and the CSI Dividend Index during the same period, respectively, with obvious excess returns.

Huafu Securities believes that one of the reasons for the sustained strength of the dividend strategy is the rising cost-effectiveness of assets in the macro interest rate downward cycle. Since 2021, China's long-term interest rates have continued to decline. As of June 14th, the yield of the ten-year national bond was 2.256%, which is at a historically extremely low level. In the macro environment of declining yields, the 'interest-bearing' value of low-valuation, high-dividend, and predictable-dividend dividend assets is highlighted.

Debon Securities stated that since 2020, the operating indicators of state-owned enterprises have undergone multiple reforms, and each reform has put forward higher requirements for the economic benefits of state-owned enterprises on the basis of the original. At the same time, policies continue to increase the reform of state-owned enterprises, and the economic benefits of state-owned enterprises are expected to continue to improve marginally. At the market level, since 2020, faced with external shocks, the performance of state-owned enterprises has been under pressure and has performed well.

State-owned enterprises, both central and local, have a higher return on net assets than private enterprises. From the perspective of year-on-year growth rate of net profit attributable to shareholders, state-owned enterprises, both central and local, also show resilience and relative stability in terms of year-on-year growth rate of net profit attributable to shareholders. The future development of state-owned enterprises may be more flexible, and the operation indicators of state-owned enterprises will continue to be optimized.

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