Since 2026, the A-share market has once again increased its focus on "certainty." Currently, overseas disturbances have not yet ended. In a phase of unclear market direction and declining risk appetite, dividend assets with stable cash flows and dividend characteristics have seen enhanced allocation value, becoming an important direction for navigating volatile cycles.
ICBC Credit Suisse Fund has accurately captured market demand. Its cross-market portfolio products—Dividend ETF ICBC (159905) and Hong Kong Dividend ETF ICBC (159691)—provide investors with a dual-core allocation strategy of "high-flexibility dividend enhancement + Hong Kong stock high dividend underpinning." This approach aims to balance defensive safety with long-term return potential, helping investors protect their core holdings while seizing opportunities.
Insurance capital, as a representative of patient capital in the market, often serves as a bellwether. According to Huatai Securities research, insurance companies continued to increase allocations to high-dividend stocks in 2025. The average FVOCI equity allocation ratio of major listed companies rose by 2.5 percentage points year-on-year to 5.4%, representing a total increase of 633.8 billion yuan. Looking ahead, Huatai Securities expects the insurance capital dividend strategy to persist, driven by two main factors: ongoing pressure to bolster stable cash yields from dividends, and the benefit of allocating equity assets to dividend stocks under the FVOCI classification to reduce profit volatility—particularly relevant given insurers' high equity allocations. This reflects a broader market craving for certainty.
From a macro perspective, the viability of dividend assets is being redefined. As the social financing structure transforms, the increasing share of direct financing requires issuers to possess sustainable dividend-paying capabilities, providing long-term underlying asset support for dividend strategies. A moderately accommodative monetary environment is also expected to support a revaluation of the dividend sector. This year's government work report reiterated the continuation of a prudent monetary policy, emphasizing stable economic growth and reasonable price recovery as key considerations. It highlighted the flexible use of tools such as reserve requirement ratio and interest rate cuts to enhance the synergy between incremental and existing policies, as well as between monetary and fiscal policies, aiming to create a favorable monetary and financial environment for the start of the 15th Five-Year Plan period. Amid geopolitical conflicts, global energy supply chains face restructuring risks, prompting investors to favor low-volatility, high-cash-flow assets in a high-volatility market environment.
In a context of persistently low risk-free rates, high-quality resource stocks and dividend-paying stocks with sustainable payout capabilities are becoming core assets for long-term capital to navigate cycles. In an era of heightened uncertainty, more capital is seeking certainty, and dividend assets—with their "high dividend yield, low valuation" characteristics—are poised to become an indispensable part of investors' anti-fragile asset allocation frameworks.
Against a macro backdrop of frequent global geopolitical disturbances and rising risk aversion, capital styles are undergoing a profound "rebalancing." Risk appetite for equity assets is declining overall, with growth sectors under pressure. Defensive sectors like coal and utilities, which feature stable cash flows, high dividends, and reasonable valuations, are expected to gain attention under the HALO framework.
Frequent geopolitical conflicts are exacerbating uncertainties in oil and gas supply, highlighting the strategic value of coal as a stabilizer and key alternative. As an asset class combining cyclical and dividend attributes, the coal sector's allocation value is expected to remain prominent under the long-term framework of dual-carbon goals and anti-involution policies. Guosheng Securities analysis suggests that against a backdrop of sustained conflicts leading to import contraction and rising coal chemical demand, coal prices are defying seasonal weakness. The longer conflicts persist, the stronger the upward momentum for coal prices may become.
In utilities, sector profits are relatively stable, and a revaluation trend is underway across multiple dimensions. Power, as a core segment, is poised for a new chapter under multiple tailwinds. According to GF Securities research, the utilities sector currently shows four positive developments: profit recovery, with power performance improving—especially in thermal power—and cash flow and dividends strengthening as the sector becomes more utility-like; demand improvement, driven by AI computing boosting electricity consumption and improving supply-demand dynamics; mechanism optimization, with accelerated power system reforms, expanded spot trading, capacity pricing, ancillary services, and green certificates benefiting renewable integration; and dividend reinforcement, as capital expenditure peaks may have passed, cash flow continues to improve, and state-owned enterprise dividend policies bolster high-yield attributes.
Furthermore, the 2026 government work report reiterated "increasing the proportion of state capital profit transfers," which may encourage listed SOEs to raise dividend payouts. Sectors with significant budget increments, such as petrochemicals, power, and coal, warrant close attention.
For instrument selection, investors may consider allocating to dividend products in both the A-share and Hong Kong markets, such as a combination of Dividend ETF ICBC (159905) and Hong Kong Dividend ETF ICBC (159691).
Dividend ETF ICBC (159905) tracks the Shenzhen Dividend Index, which comprises 40 stocks from the Shenzhen market with stable dividend histories, high payout ratios, and good liquidity. Its methodology differs from most dividend indices by employing market cap screening plus dividend yield, cash payout ratio, and ROE filters, resulting in higher quality stock selection. The index's ROE consistently leads peers, indicating components not only have strong dividend capabilities but also sustainable profit generation. Sector-wise, it overweight consumer staples, home appliances, machinery, chemicals, and non-ferrous metals—pro-cyclical sectors that create a unified beta exposure. This configuration is better suited to recent market conditions compared to the divergent beta performances of indices like the CSI Dividend, SSE Dividend, and Low Volatility indices. It positions the Shenzhen Dividend Index for stronger performance during consumer recovery and manufacturing upturns. Currently, domestic demand stimulus policies are ongoing, chemical industry capacity expansion is nearing its end, non-ferrous metal supply is constrained, and the machinery sector is in an upward cycle—all pro-cyclical areas where the index has significant exposure.
In terms of performance, Wind data shows that as of March 31, 2026, the Shenzhen Dividend Index returned 3.76% since 2025, outperforming the Dividend Low Volatility Index and Dividend Low Volatility 100 Index, which returned 2.38% and 1.34%, respectively. Particularly from the second half of 2025, as rising long-term government bond yields pressured bank valuations and commodity price increases drove up valuations in non-ferrous and chemical sectors, the Shenzhen Dividend Index significantly outperformed, with a return of 7.40% during that period, compared to -0.76% and 4.15% for the two low-volatility dividend indices.
Valuation-wise, Wind data indicates that as of March 31, 2026, the Shenzhen Dividend Index's five-year dividend yield percentile stood at 93.63%, indicating historically high attractiveness. Other dividend low-volatility indices had dividend yield percentiles mostly below 20%. Its five-year P/E and P/B percentiles were 38.54% and 76.10%, respectively, while those for the Dividend Low Volatility Index, Dividend Index, and CSI Dividend Index were above 90%, giving the Shenzhen Dividend Index a significant valuation advantage.
Hong Kong Dividend ETF ICBC (159691) is the first and only ETF tracking the CSI Hong Kong Stock Connect High Dividend Select Index. This index selects 30 liquid, consistently dividend-paying stocks with high yields, sustained profitability, and growth potential from Hong Kong Stock Connect-eligible stocks, based on metrics like ROA, net profit growth, and operating cash flow ratio. It uses dividend yield-adjusted free-float market cap weighting to reflect the performance of high-dividend, profitable, and growth-oriented stocks in the Hong Kong market.
In terms of component quality, the index demonstrates superior metrics. Wind data shows that as of end-2024, its weighted average three-year ROE was 13.46%, higher than the S&P Hong Kong Stock Connect Low Volatility Dividend Index's 7.67%. Its interest-bearing debt ratio was lower at 15.89%, significantly below the latter's 45.06%.
Sector distribution, classified by Wind primary industries as of March 31, 2026, shows the index has high weights in stable sectors like utilities (16.63%) and resource sectors like energy (29.59%), offering relatively high certainty and stability in cash flow generation. Financials have a lower weight (10.05%), partially avoiding risks associated with high-leverage industries.
Long-term performance data from Wind, as of March 31, 2026, indicates the Hong Kong Stock Connect High Dividend Select Total Return Index gained 83.70% cumulatively since 2020, with an annualized return of 10.36%, while the Hang Seng Index fell 12.07% cumulatively, with an annualized return of -2.07%.
In summary, the Shenzhen Dividend Index emphasizes growth, offering greater elasticity during economic recovery or growth-oriented market phases. The Hong Kong Stock Connect High Dividend Select Index focuses on high yield and quality defense, appealing during market volatility and risk-off sentiment, while overall low valuations in Hong Kong stocks present potential revaluation opportunities. The two products complement each other effectively.
Notably, Hong Kong Dividend ETF ICBC (159691) has a management fee of 0.45% per year and a custody fee of 0.07% per year, totaling just 0.52% annually, helping investors capture opportunities at low cost.
Amid multiple converging drivers, investors with suitable risk tolerance may consider using the combination of Dividend ETF ICBC (159905) and Hong Kong Dividend ETF ICBC (159691) for cross-market "A+H" allocation. This approach could offer a prudent way to capture dividend-themed investment opportunities in today's uncertain market environment.
Note: Past index performance does not guarantee future results and is not indicative of fund performance.
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