The high-dividend strategy is outstanding, and dividend assets set the main theme in 2024?

With the Chinese Shenhua (601088. SH) has surpassed CATL (300750.SZ) in the past five trading days since the beginning of 2024, and the style of the A-share market has been extremely differentiated, and the high-dividend strategy has flourished.

On January 8, the three major A-share indexes all fell more than 1%, and the Shanghai Composite Index closed down 1.42% at 2,887.54 points, down 2.94% since the beginning of the five trading days. The two major growth style indices continued to hit new lows, with the STAR 50 Index closing at 784.43 points, down 2.88%, and the ChiNext Index continuing to hit a new low since January 2020 at 1744.41 points, with the annual decline of the two major indexes approaching 8%. Northbound funds sold a net of 4.347 billion yuan on the same day, and CATL led the net selling volume with an amount of 342 million yuan.

From the perspective of valuation, the ChiNext Index and the STAR 50 Index are both at their historically low levels, but at the beginning of the new year, institutions are waiting to attack, and they are flocking to high-dividend and low-volatility sectors such as coal, petrochemicals, and public power, which has also attracted more transactional funds to pour in.

Industry insiders interviewed by the first financial reporter believe that the Fed's interest rate cut expectations, the improvement of domestic economic fundamentals, and the reversal of sentiment are important factors that catalyze the formation of growth styles.

Growth and high dividends are extremely differentiated

At the beginning of 2024, the annual investment strategies of most institutions point out that the technology growth sector represented by artificial intelligence and pharmaceuticals is expected to dominate China's equity market in 2024, especially the STAR 50 Index, which is at the lowest valuation level in history, is considered worthy of active layout.

However, the market performance has given investors a blow in the face. Since the beginning of the five trading days of the year, the Science and Technology Innovation 50 Index, which represents "hard technology", and the ChiNext Index, which represents "three innovations and four innovations", have continued to fall to new lows. After falling below the new low set on December 26, 2023 on January 4, the STAR 50 Index has fallen by 7.93% since the beginning of the year, while the ChiNext Index has fallen by 6.06% over the same period, and both indices have significantly underperformed the Shanghai Composite Index (-2.94%).

On the other hand, in the dividend sector, as the overall market decline continues, stocks with high dividends and low volatility represented by coal, utilities and banks continue to be active. "The king of coal" China Shenhua is the representative of this round of dividend market, the stock rose more than 1% on January 8, and continued to hit a 15-and-a-half-year high, closing at 33.65 yuan / share.

At the same time, the total market value of CATL, the "king of new energy", was overtaken by China Shenhua, as of the close of the 8th, the total market value of China Shenhua reached 668.576 billion yuan, and CATL was 658.956 billion yuan.

Northbound funds flocked to the high-dividend and low-volatility sectors, with banks and power topping the list of Shanghai-Shenzhen-Hong Kong Stock Connect holdings, with an increase of 2.179 billion yuan and 1.398 billion yuan respectively in the past five days, with an increase of 1.72% and 2.24% respectively, and the base metal sector had the largest increase of 6.05%. In terms of individual stocks, in the past five trading days, northbound funds have increased their holdings in Agricultural Bank of China (601288. SH) 708 million yuan, and increased its holdings in Yankuang Energy (600188.SH) by 436 million yuan. Among them, the Agricultural Bank of China played a leading role in the banking sector, and recently hit a record high price of 3.78 yuan per share.

For the ultimate interpretation of the market market, Zhao Xi, investment director of Tuopai Fund, said in an interview with the first financial reporter that historically, the end of each round of interest rate hikes and the early stage of interest rate cuts by the Federal Reserve are often when emerging markets (such as Hong Kong stocks) encounter greater challenges. "From an international macro perspective, although it is now at the end of the Fed's interest rate hike, it is still in a high interest rate environment, and the pressure on emerging markets is still relatively obvious. Zhao Xi said, "From a domestic macro point of view, for example, the problems caused by the real estate industry have not been properly solved, and the risk aversion of funds is strong, and equity funds tend to hedge in the case of high positions, buying high dividends, low valuations, and anti-cyclical targets, resulting in the current polarization situation." ”

Are high-dividend strategies already overcrowded?

For the trend of this round of dividend asset allocation, the market generally believes that public funds are the main participating forces. "Money has an agglomeration effect. As money continues to pour into high-dividend and low-volatility sectors, there will be more short-term or transactional funds, and no one wants to go short. A private equity person in East China told reporters.

In the past, the excess returns of institutions such as mutual funds have come from changes in market style (growth or value). The above-mentioned private equity sources said that the huddle strategy will definitely be able to pull net worth, but it will not work forever. "Referring to the 2019~2021 year, the rise of large consumption and new energy, as well as the speculation of the AI market in mid-2023, etc., aside from the fundamentals and policies, the congestion of funds is an important signal. For now, more capital influx will accelerate the rally of the dividend sector, and the growth style will have a chance to get out of the market until the cost-effectiveness of the high-dividend group becomes less cost-effective and the high-dividend strategy fails. The above-mentioned private equity source told reporters, "Investors chasing the rally need to be wary of the risk of overcrowding of high-dividend strategies." ”

Judging from the distribution of industry ups and downs from 2024 to the present, there is also the characteristic of "the higher the dividend yield, the higher the increase". Taking the turnover rate as a reference, only the SSE dividend is above the 75% quantile in the pure dividend strategy, and the coal heat at the industry level is relatively high but does not touch the risk of overheating, and utilities are still at a relatively low level. At the same time, the carrying capacity of the dividend strategy is stronger than that of AI, TMT and small and micro cap stocks, and the higher capacity cap is expected to provide better long-term performance sustainability.

Coincidentally, Minsheng Securities also said in a research report on January 7 that the trading characteristics of the "peak" of various instructions have not yet appeared in the dividend style: the average daily turnover rate of the CSI Dividend Index is still at the lowest level since June 2021, and the proportion of weekly turnover has risen this week, but it has not reached the historical extreme.

"A closer look at the dividend market is fundamentally inseparable from fundamentals. These are regarded as defensive targets, often profitability, competitiveness, cash management ability, are the leaders of various industries, but compared with the hot semiconductors, artificial intelligence, new energy, coal, electricity, banking, petroleum and petrochemical themes are not enough 'sexy'. However, we believe that investors can consider actively exploring the fundamentally supported, low valuations and economic cycle alignment in the dividend sector, compared to the growth style that is in the doldrums and has high turnaround uncertainties. The aforementioned private equity source said.