With Powell's strongest voice of interest rate cuts, the pace of rate cuts by the Federal Reserve is accelerating, and the Hong Kong banking industry is also taking the lead. According to media reports, several banks have lowered the interest rates on Hong Kong dollar time deposits. Looking at the latest fixed deposit rates of major banks, the era of 4% high-yield fixed deposits has quietly passed; short-term deposit rates are higher than long-term rates, but are now generally below 3.5%.
For example, the official website of Dah Sing Bank shows that the current highest interest rate for 3-month Hong Kong dollar time deposits has been lowered to 3.4%. According to information released on the Bank of China (Hong Kong) official website, the annual interest rate for 3-month Hong Kong dollar new funds premium fixed deposits is 3.4%.
Analysis believes that as Hong Kong interest rates often follow changes in US interest rates, and with the expectation of Fed rate cuts heating up, Hong Kong banks choose to lower fixed deposit rates in order to avoid the impact of high-interest locked deposits on interest spreads.
With the global rate cut trend unfolding, the decline in fixed deposit rates is not just a single event, but perhaps a general trend. If the era of fixed deposits bids farewell, how can we find 'alternative choices' in the market?
Hot theme of the year! Does the high dividend strategy still work?
In the context of interest rate cuts, risk-free rates gradually decrease, and market liquidity is abundant, which is expected to push up the valuation of risk assets such as stocks. At the same time, there is a type of asset that not only benefits from the return of market risk preferences, but also is a 'stable income' option - that is, the popular theme of high dividend stocks in the Hong Kong stock market this year. Currently, many large-cap blue-chip stocks still have pre-tax dividends of 6%-7%, and their stock prices are stable and have high investment value.
When looking at blue-chip stocks with both high stock prices and dividend yields since the beginning of this year, you will find that they are concentrated in defensive sectors such as banking, energy, and industry, with mainland banks occupying the majority of positions.
Professionals believe that in the context of increasing market risk aversion this year, the banking sector has high dividends, high stock dividends, and low valuations, making it a preferred choice for funds. In addition, mainland banking stocks have also attracted a lot of incremental funds from insurance, bank wealth management, ETFs, and other sources, and they are favored by large asset management institutions.
Today, during the trading session, Industrial and Commercial Bank of China and China Citic Bank, with dividend yields of over 7%, once again reached new highs, and the popularity remains unabated.
At the same time, the recent period is the peak disclosure period for interim results. Blue-chip stocks with high dividend yields are also very attractive. Taking HSBC Holdings as an example, its Q2 performance announced not long ago exceeded expectations, and it also announced a $3 billion share buyback plan and a stable annual dividend distribution. Therefore, it has also achieved an impressive dividend yield of 9.75% and a year-to-date increase of 18%.
How to choose high dividend stocks?
Since August, Hong Kong stocks have entered the period of intensive interim report disclosures, and more and more Hong Kong companies have disclosed their dividend plans. In terms of dividend amount, state-owned holding companies and Hong Kong property companies among the "middle letter" companies have a higher dividend distribution. In terms of industry distribution, companies in the telecommunications services, real estate investment, and resource sectors are more active. In the case of market fluctuations, companies with good cash flow, high dividend payout ratios, and high dividend yields are favored by funds.
Haitong Securities believes that with the clear expectation of Fed interest rate cuts and the improvement in global liquidity, overseas capital is expected to flow into the Hong Kong stock market. Due to the premium of A/H shares, Hong Kong stocks have a relatively large advantage in terms of dividend yield compared to A shares. Since the beginning of the year, a series of policies aimed at improving cross-border interconnection mechanisms and promoting the common development of the mainland and Hong Kong capital markets have been implemented one after another. In addition, with the expectation of dividend tax reduction for Hong Kong stock connect, the high dividend sector of Hong Kong stocks is expected to be further boosted.
For the high dividend sector, a higher dividend yield is not necessarily better if one wants to pursue stable income. Since changes in stock prices can also affect the returns on investments in high dividend stocks, blue-chip stocks with strong business resilience, sufficient cash flow, and stable dividend payments would be a better choice. Institutions pointed out that based on potential dimensions such as valuation, ROE, dividend payout ratio, and proportion of operating cash flow, the high dividend defensive sectors that can be sustainably allocated before the "market bottom" are banks, transportation, utilities, and communication.
In addition, if you want to bet on the growth of the overall high dividend yield sector and diversify investment risks, the Hong Kong high dividend yield ETF has also been very profitable this year, providing investors with more choices. Among them$Global X Hang Seng High Dividend Yield ETF (03110.HK)$ The year-to-date increase is close to 18%, $Fubon Hang Seng Shanghai-Shenzhen-Hong Kong (Selected Corporations) High Dividend Yield Index ETF (03190.HK)$Please use your Futubull account to access the feature.$Ping An of China CSI HK Dividend ETF (03070.HK)$ with increases of over 20% and 30% respectively.
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