Under the background of cooling down in the growth track stock speculation, the market logic is changing.

Recently, the market has opened a series of pullbacks, with many sectors such as electronics, pharmaceutical biology, computers and new energy declining significantly, while many traditional economic sectors, such as banks, iron and steel, public utilities, transportation, and so on, have performed stably or even bucked the trend. Behind this, on the one hand, affected by the Fed's interest rate hike, liquidity contraction leads to turbulence resonance in major global securities markets, and growth plates are more affected by liquidity disturbances; on the other hand, when market volatility increases, banks and other high dividend assets have their own attributes of low withdrawal and low volatility, which enhance their allocation value and are more likely to be concerned by long-term funds.

The research of Everbright Securities believes that the overall performance of the high dividend portfolio is better, but it is slightly different in different market environments, when the market falls, the high dividend portfolio performs well and has a strong defensive attribute; when the market fluctuates upward, the performance of the high dividend portfolio is also better, but when the market rises rapidly, the performance of the high dividend portfolio may not be good.

Trillion telecom giants soar by 6%

On September 23, the Hong Kong A-share market continued its volatile adjustment trend, and during this period, some stocks bucked the trend and even reached an all-time high. On September 23rd, communications giant China Mobile Limited bucked the trend, rising nearly 7% in intraday trading, setting a new high since its A-share listing. Hong Kong stocks$CHINA MOBILE (00941.HK)$It also rose higher in intraday trading, up more than 2%, setting a new high.

China Mobile Limited is the largest operator in China, leading in the industry in terms of user scale, revenue volume and so on. In the first half of 2022, the company achieved revenue of 496.9 billion yuan, an increase of 12% over the same period last year, and a net profit of 70.3 billion yuan, an increase of 19% over the same period last year.

In the first half of this year, China Mobile Limited added 124 million customers to the 5G package, bringing the total to 511 million. Driven by the rapid transfer of 5G and the consumption of digital life, the average income of mobile users increased steadily, reaching 52.3 yuan per household per month. Recently, the August operation data released by China Mobile Limited show that the number of 5G package users continues to increase, with a net increase of 15.082 million in August, bringing the total to 539 million.

It is worth mentioning that, thanks to the rapid expansion of information services such as digital content, smart home, 5G vertical industry solutions and mobile cloud, the revenue from digital transformation has increased to 110.8 billion yuan, an increase of 39% over the same period last year. Accounting for 26% of the company's main business income, it has become the main driving force of the company's revenue growth.

Citic Construction Investment believes that in the era of digital economy, the digital transformation of enterprises will speed up, and the company is expected to seize the opportunity to achieve rapid growth of government and enterprise business: first, the company has a cloud resource pool covering the whole country with "N (central resource) + 31 (provincial resource pool) + X (edge cloud node)". Coupled with the fact that the company's broadband network reaches the whole country, it can really achieve cloud network convergence and multi-cloud access, and provide agile cloud services for government and enterprise customers. Second, the company's external service IDC has 429000 shelves, with a large number, wide distribution and reasonable distribution of resources, which can provide localized services for customers; third, the company's channel coverage is perfect, and all provinces and cities have strong sales teams that can provide personal and customized services; fourth, data security is becoming increasingly important, and the company, as a central enterprise, has created a secure and reliable comprehensive capability.

The traditional business remains stable, and the new business is becoming the "second curve" of information services. After the announcement of the results, China Mobile Limited's share price continued to rise, rising nearly 7% in intraday trading on the 23rd, setting a new high for its A-share listing.

In addition, due to the recent weak performance of the overall market, there has been a significant correction in the valuation of the growth sector under liquidity constraints, while high dividend assets with low withdrawal and low volatility have gradually become the direction of market attention, especially some blue chip stocks with performance support. At the same time, high dividend portfolios are being favored by investors because companies usually have stable performance and sustained high dividends.

China Mobile Limited's dividend after the listing of Hong Kong shares shows that the company's return on shareholders' capital injection has led its peers in paying dividends per share over the past decade. After the announcement of the 2021 report, China Mobile Limited paid a final dividend of HK $2.430 per share in 2021, totaling HK $51.912 billion, or about RMB 44.731 billion. After the release of this year's interim report, China Mobile Limited paid a dividend of 2.20 Hong Kong dollars per share, a total dividend of 46.998 billion Hong Kong dollars, or about 40.466 billion yuan.

The company said that in order to better give back to shareholders and share the fruits of development, taking full account of profitability, cash flow and future development needs, the profits distributed in the form of cash gradually increased to more than 70% of the profits attributable to shareholders in the three years from 2021, and strive to create greater value for shareholders.

The logic of the market changes

In fact, in addition to China Mobile Limited, China Life Insurance Company Limited, Petrochina, Vanke A, Daqin Railway, Poly Development and other major dividend payers are also relatively strong.

High dividend stock refers to the stock with high dividend every year. Compared with other stocks, investing in high dividend stock can not only get the return of stock price change, but also get higher dividend yield. According to the research of Everbright Securities, high dividend stocks are mainly concentrated in traditional industries such as banking, transportation and public utilities, with large market capitalization, high debt ratio and adequate cash flow as its main characteristics.

Everbright Securities believes that the current rebound in the market has exceeded the similar period in 2020, but the uncertainty of corporate earnings and the downward adjustment of earnings expectations are still the resistance that the market needs to overcome, so the market as a whole is likely to remain volatile in the third quarter. The high dividend portfolio is expected to perform well in the second half of the year against a relatively low possibility of a rapid upward trend in the market.

High dividend assets are essentially a kind of short-term assets, which benefit more in the period of rising interest rates and the dominant period of low valuation. The continuous dominance of high dividend strategy is inseparable from the structural market of the weighted industry itself, whether it is the macro environment, performance level, or money-making effect, in fact, all point to the financial real estate or periodic manufacturing should have phased advantages.

Guosheng Securities believes that in order to grasp the dominant market of high dividends, we should focus on the superposition of the following types of environment: 1) at the macro level, focus on two types of environment: one is that PPI and PMI go up at the same time, and the monetary conditions have been tightened; the other is that PPI and PMI go down at the same time, and the monetary conditions tend to be looser. 2) at the performance level, focus on two types of structures: one is the overall downward turn of the full A profit cycle, and the other is the upward profit cycle but relatively dominant financial real estate / cycle manufacturing. 3) in terms of market performance, we should pay attention to two kinds of situations: one is the sharp correction of the market, the characteristic of "bear market" is prominent; the other is the dominant undervalued style in the upward period of interest rates.

Caixin Securities said that in the context of the Fed's interest rate increase and contraction table, the domestic wide monetary space is relatively limited, and the broad currency will further transmit to broad credit. In the second half of the year, the macro environment will be more favorable to the value sectors with performance support, and the high dividend sector will benefit more. Overseas, US inflation expectations have eased recently, but it is still necessary to guard against the impact of the US "wage-inflation" spiral and food CPI growth on inflation. There is some repeated pressure on US inflation. At present, it is still in the period of accelerating liquidity tightening in the United States, corporate financing pressure is greater, and the market will favor high dividend yield targets with abundant cash flow.