1. The high dividend strategy is effective for a long time. The Hong Kong stock market is undervalued, the high dividend allocation value is higher, and the high dividend strategy is effective for a long time. Sharing high-quality corporate dividends and adapts to different market environments. It is an important strategy for investors to stabilize earnings in a changing market. The high dividend strategy has performed well in the Hong Kong stock market over a long period of time, obtaining excess returns compared to the Hang Seng Index. Economic growth has slowed, interest rates on mainland bonds have entered a downward channel, and the attractiveness of high-dividend assets has increased. Compared with other major global markets, the Hong Kong stock market has a high dividend rate and stable dividend rate. The valuation level is still at a historically low level, and has high investment value.

Under the ETF interconnection mechanism, Hong Kong's high-dividend products have consistent trading hours and tax advantages.

2 Hang Seng High Dividend Ratio Index: Continued high dividend yield, sufficient room for recovery under undervaluation. The Hang Seng High Dividend Ratio Index was released on December 10, 2012. It focuses on securities with high dividend rates among the constituent stocks of the Hang Seng Composite Index.

Market capitalization distribution: The weight is mainly based on the style of large market capitalization. The share of constituent stocks with a market value of HK$100 billion to HK$300 billion is 38%, and companies above HK$300 billion account for 24%.

Industry distribution: Focus on financial performance, industry distribution reflects defensive attributes. Companies in the financial sector account for the highest share of weight, at 37.27%. In terms of industry segments, it mainly covers 14 industries such as banking, utilities, real estate, insurance, and telecommunications.

Fundamental performance: Continued high dividend capacity, and constituent stocks of central enterprises bring room for value revaluation. As of the end of October 2024, the Hang Seng High Dividend Yield Index's dividend ratio reached 6.85%, far exceeding the Hang Seng Index dividend rate of 4.01%, bringing investors considerable cash returns. Companies with more than 56% of the constituent stocks are state-owned state-owned enterprises, which will further benefit from operational improvements and continued increase in dividends in the revaluation of state-owned enterprises.

Earnings performance: Long-term performance is superior to the Hang Seng Index, and the performance is relatively stable in a volatile market. In the past 1 year, 3 years, and the past 5 years, the cumulative yield of the Hang Seng High Dividend Ratio Index was 26.82%, -2.93%, and -8.69%, respectively. Compared with the Hang Seng Index's excess earnings, the long-term earnings performance was relatively superior.

Valuation level: The price-earnings ratio has fallen back to a low level, and there is plenty of room for repair. As of the end of October 2024, the price-earnings ratio and net price-earnings ratio of the Hang Seng High Dividend Ratio Index were 5.77 and 0.52, respectively, lower than the Hang Seng Index.

Currently, the price-earnings ratio is in the 30.75% quantile since 2015, which is at a historically low level.

Index combination investment strategy: high dividends, technology rotation, and high win rate strategy with both offense and defense. Since 2020, there has been a clear rotation between the high-dividend sector and the tech sector. The Global X Hang Seng Technology ETF and the Global X Hang Seng High Dividend Ratio ETF represent high dividend and technology sectors respectively. Since 2020, the annualized return of the strategy portfolio has reached 11.04%, achieving overall optimization of grasping the flexibility of the technology sector in a bull market, obtaining dividend returns in a bear market, and reducing volatility and retracement.

3 Global X Hang Seng High Dividend Ratio ETF: The target of Hong Kong Stock Connect's investment, the powerful Global X Hang Seng High Dividend Ratio ETF Fund (3110.HK) was established on June 11, 2013. The manager is Future Assets Global Investments (Hong Kong) Limited, with a scale of approximately HK$2.689 billion as of October 2024. The fund was added to the Hong Kong Stock Connect list on May 6, 2024. It is the first high dividend rate ETF traded southbound under the ETF Interconnect Program. After being included in the Hong Kong Stock Connect list, the product size and monthly turnover increased markedly.

Risk warning

The Global X Hang Seng Technology ETF Fund is a product of Future Assets Global Investment (Hong Kong) Limited. This report is based on historical data on fund products and does not constitute any investment advice. Macroeconomics falls short of expectations, overseas markets fluctuate greatly, historical experience does not represent the future, and exchange rate risks bring differences in returns.