Event: on February 17, 2020, Beijing time, Hang Seng Index was launched.Hang Seng China High dividend yield Index and Hang Seng Hong Kong Stock Exchange China Technology Index.

First, comments-- the launch of the two indexes meets the needs of the market for the allocation of cost-effective advanced manufacturing core assets and value stocks.

1. Hang Seng Index companies have issued a high dividend yield index in recent months, adapting to the pursuit of "performance-to-price ratio" by global funds in the context of "asset shortage". 1) on September 9, 2019, the Hang Seng China High dividend yield Index was launched; 2) on November 18, 2019, the Hang Seng Hong Kong Stock Connect High dividend yield Index was launched; and 3) on February 17, 2020, the Hang Seng China High dividend yield Index was launched. The release interval is only 2 to 3 months.

2. The dividend yield of the main weighted shares of the Hang Seng High dividend yield Index is quite attractive. According to the weighted (according to the disclosed relative weight) of the top 10 heavyweights, the average dividend yield was as high as 6.2% as of February 17, larger than 4.5% of the dividend of the China Securities Exchange, 3.3% of the Hang Seng Index and 2.9% of the Shanghai Stock 50 over the same period. It is also higher than the maturity yield of the AAA 5-year corporate bonds of the same period by 3.38%. The weighted average dividend yield of heavyweights was once close to 9.0% in early June, mid-August and October 2019.

3. The heavyweights of the Hong Kong Stock Connect China Science and Technology Index and the core asset portfolio of the advanced manufacturing industry proposed in 20191207 "the rise of Core assets of Advanced Manufacturing Industry" recommend Hong Kong stocks TMT with a high degree of overlap, which tends to represent the transformation direction of China's economy. Among the top 10 heavyweights announced this time, XIAOMI Group, Meituan Dianping, Tencent, Sunny Optical, Kingdee International Software Group, Semiconductor Manufacturing International Corporation and AAC Technologies Holdings Inc. all appeared on our recommendation list.

4. Compared with the A-share technology companies represented by gem, the top 10 heavyweights in the Hong Kong Stock Connect China Science and Technology Index are more cost-effective. The median of PB, PE_TTM and PS_TTM of the top 10 heavyweights are lower than the corresponding valuation index of the gem. As of February 17, 2020, the median PE_TTM, PB and PS_TTM of the weighted stocks of the Hong Kong Stock Connect China Technology Index were 33.9 (lower than 61.7 of the gem index), 3.5 (lower than 6.5 of the gem index) and 4.1 (lower than 5.8 of the gem index).

Second, investment strategy-- based on "performance-to-price ratio" to make investment, value stocks choose time, growth stocks choose stocks.

It is more difficult to invest in the rest of the year, with risk-free returns at historic lows, short-term valuations of "good things" in A shares are no longer cheap, and the "cheap things" market is divided on its fundamentals.

The strategy suggests investing or trading around value for money for the rest of 2020.

1) the performance-to-price ratio of value stocks in the next stage is expected to be transformed into the attractiveness of large types of asset allocation. With lower risk-free yields and economic stimulus policies, core assets with high dividends and low valuations in real estate, finance and mid-upstream sectors have become more attractive to allocation funds.

2) the key to the performance-to-price ratio of emerging growth stocks lies in the selection of stocks and real growth core assets. The operating pressure in the first quarter makes it easier to distinguish the "gold content" of the core assets of advanced manufacturing, which is expected to usher in a better buying point. Short-term guard against "Buffalo thinking" hype, do not recommend blindly chasing high.

3) looking at the performance-to-price ratio across the market, Hong Kong stocks have global valuation depression value stocks and high performance-to-price technology stocks leaders.

Risk hint: global economic growth is declining; monetary policy in China and the United States is not as loose as expected; big country game risk

1. Key chart