The 'Central Enterprise + Dividend' strategy is gaining significant attention. The term HALO is trending, yet it may be surprising that this modern-sounding concept corresponds in capital markets to sectors like petroleum and petrochemicals, coal, transportation, and utilities—areas often perceived as more traditional.
What exactly is HALO? HALO, an acronym for 'Heavy Assets, Low Obsolescence,' was formally introduced in a Goldman Sachs research report from February 2026. In simple terms, it refers to identifying hard assets that are difficult for AI to replace, or that AI development even depends on. Examples include: - Cyclical resources (petroleum, coal, non-ferrous metals) - Power and energy (grids, electricity generation) - Transportation infrastructure (railways, ports, pipelines)
The core characteristics of these assets are high replication costs, long service life, and inherent monopolistic attributes. No matter how advanced AI becomes, it still relies on electricity, networks, and raw materials. In the A-share market, these hard asset sectors predominantly point to one major player: central enterprises.
How is the Central Enterprise Dividend Strategy related to HALO? A recent report by Sinolink Securities notes that when screening based on tangible assets per employee and the proportion of tangible assets, sectors like petroleum and petrochemicals, non-ferrous metals, coal, hydropower, gas, and transportation fall under the category of HALO assets that are less susceptible to AI replacement. This suggests potential systemic revaluation opportunities. These sectors show significant overlap with the central enterprise dividend strategy.
Taking the CSI Central Enterprise Dividend Index as an example, as of March 4, 2026, its top five weighted industries are: - Transportation: 20.67% - Banking: 18.20% - Petroleum & Petrochemicals: 9.57% - Construction & Decoration: 8.70% - Coal: 8.49%
Excluding banking, the other four major weighted industries are typical HALO assets, collectively accounting for nearly 50% of the index weight. Importantly, 100% of the index constituents are central enterprises. This implies: - Stronger fundamentals - More stable operating cash flows - Clearer business models - Lower capital expenditure pressures
In the current environment of heightened macroeconomic volatility, such assets naturally possess defensive qualities. In contrast, other A-share dividend strategies, like the CSI Dividend Index and the CSI Dividend Low Volatility 100 Index, have higher weightings in financial and consumer sectors, which have recently underperformed compared to the HALO theme.
In fact, looking at the performance of the 31 Shenwan primary industries over the past six months, the HALO assets covered by the Central Enterprise Dividend Index have demonstrated superior returns. Extending the timeline further, the long-term performance of the Central Enterprise Dividend Index is impressive. As of March 4, 2026, the total return index (which includes dividend income) has risen 23.30% over the past year, outperforming the CSI Dividend Total Return Index (15.87%), the Dividend Low Volatility 100 Total Return Index (10.89%), and even growth sectors like pharmaceuticals (5.15%) and computers (4.44%).
The performance of the Huatai-PineBridge Central Enterprise Dividend ETF (561580), which tracks this index, confirms this trend. As the first central enterprise dividend-themed ETF in the market, established on May 18, 2023, it has achieved a cumulative return of 43.86% as of March 4, 2026. While the HALO theme acts as a catalyst, the strategy's enduring strength is underpinned by the sustainable dividend-paying capability and defensive nature of high-dividend strategies themselves.
The underlying logic of the Central Enterprise Dividend Index rests on three pillars. The popularity of HALO reflects a market shift from a 'light-asset expansion narrative' towards a repricing of 'scarcity.' Viewed through this lens, the high-dividend, low-valuation characteristics of the index are themselves scarce commodities.
First, in an era of low interest rates, high dividends become a 'hard currency.' The yield on 10-year government bonds has fallen to 1.78%, and the time deposit rates of the six major state-owned banks have all dropped below 2%. Meanwhile, the dividend yield of the Central Enterprise Dividend Index stands at 4.26%, with the spread over the risk-free rate widening to 2.48%, placing it in the 76.18th percentile historically since the index's launch on July 20, 2012. As returns from pure fixed-income investments diminish, equity assets capable of providing stable cash flows are likely to attract capital.
Second, with the normalization of geopolitical conflicts, energy assets are receiving a 'safety premium.' Central enterprises, as stabilizing forces in the domestic capital market, inherently possess strong anti-cyclical and anti-volatility capabilities. A deeper rationale is that as geopolitical risks evolve from short-term disruptions to persistent variables, the 'geopolitical premium' for energy assets may endure. Sectors like petroleum, petrochemicals, and coal, which are heavily weighted in the index, are direct representatives of such assets.
Third, policy support is turning dividends from a 'soft constraint' into a 'hard requirement.' Since 2023, regulatory signals have become increasingly clear, including the promulgation of the 'New National Nine Articles' in 2024, a shift in SASAC's performance assessment criteria, and high-level reaffirmations in late 2025 to strengthen market value management and shareholder returns. The results are evident: in 2025, 478 listed central enterprises distributed a total of 871.394 billion yuan in cash dividends, accounting for 42% of the A-share market total. The 50 constituents of the Central Enterprise Dividend Index contributed 735.179 billion yuan of this amount, representing over 80%.
Looking ahead to 2026, numerous new concepts may emerge in the A-share market. However, regardless of changing narratives, only assets with reasonable valuations and fundamental support are likely to withstand style shifts. The central enterprise dividend strategy offers the relative certainty of 'high dividends' coupled with the scarcity of 'HALO assets.' Amid current AI sector crowding and narrative turbulence, it may warrant consideration as a core holding or the defensive end of a barbell strategy.
For investors aligned with this logic, the first central enterprise dividend strategy ETF, the Huatai-PineBridge Central Enterprise Dividend ETF (561580), established on May 18, 2023, is an option. Investors without stock trading accounts can also gain exposure through its corresponding feeder funds (Class A: 020466, Class C: 020467). After all, a visible dividend yield can sometimes be more compelling than speculative potential.
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