Recently, the relevant person in charge of the State-owned Assets Supervision and Administration Commission said that the study will include the effectiveness of market value management in the assessment of the responsibility of central enterprises, and then the elephant danced, PetroChina rose again after 8 and a half years, and a number of leading central enterprises such as China Unicom and China Communications Construction also rarely rose to the limit, and the CSI Hong Kong Stock Connect Central Enterprise Dividend Index rose 11.06% in three transactions from January 23 to 25, 2024. ChinaAMC CSI Hong Kong Central Enterprises Dividend ETF (subscription code: 513913, trading code: 513910), which focuses on investing in central enterprises, also coincided with the sale.
In fact, as early as the beginning of the year, a report sparked heated discussions, and the market value of China Shenhua, the "first brother of coal", surpassed CATL to a 15-year high. What's going on behind the scenes?
Source: wind, 1/19/2024
The first is the top-level design under the comprehensive reform. The report of the 20th National Congress of the Communist Party of China pointed out that it is necessary to "deepen the reform of state-owned assets and state-owned enterprises, accelerate the optimization of the layout and structural adjustment of the state-owned economy, and promote the state-owned capital and state-owned enterprises to become stronger, better and bigger." "At a new historical starting point, the Party Central Committee has made major arrangements for the reform of state-owned enterprises, and all localities have actively carried out a new round of deepening and upgrading of state-owned enterprise reform, promoting state-owned capital and state-owned enterprises to become stronger, better and bigger, and the overall competition and return on investment of state-owned enterprises are gradually improving.
The second is the escort under anti-globalization. In the context of intensified global competition and the beginning of anti-globalization, the report of the 20th National Congress of the Communist Party of China emphasized that "national security is the foundation of national rejuvenation, and social stability is the prerequisite for a strong country", and made a strategic deployment of "ensuring a new development pattern with a new security pattern". State-owned enterprises (SOEs) are concentrated in important areas of the national economy, shouldering energy security, food security and supply chain security, and their competitiveness can not only improve the security of related fields, but also provide protection for investors.
The third is to point to the first-class assessment and guidance. The assessment of central enterprises by the SASAC will be dynamically adjusted every year to adapt to the key tasks at different stages, which can be regarded as the baton for the reform and operation of central enterprises. In 2023, the assessment system of central enterprises will be optimized to "one profit and five rates" and "one increase, one reduction and four improvements", that is, the total profit will increase, the asset-liability ratio will be stabilized, and the R&D investment intensity, labor productivity of all employees, return on net assets, and operating cash ratio will be improved.
Fourth, the stable return of ballast stone positioning. The overall positioning of central enterprises is the stabilizer and ballast stone of the national economy, although the overall growth does not have an advantage, but it has an advantage in stable returns. For example, in 2022, the overall tax payment of central enterprises will exceed 2.8 trillion yuan, which is higher than the overall growth rate of -3.5% in the country. In the past year, central enterprises have also increased dividends, so that investors can better share the dividends of enterprise development.
For example, China Shenhua's dividend per share has gradually climbed from 0.32 yuan in 2015 to 2.55 yuan in 2022, and the company's ROE has climbed from 5.48% in 2015 to 18.07% in 2022, and the feedback to investors has improved significantly.
It is in the above context that despite the domestic transformation and upgrading, economic restructuring and de-globalization, the central enterprises represented by China Shenhua still bring relatively stable returns to investors. Among them, the CSI Hong Kong Stock Connect Central Enterprises Dividend (index code 931233, referred to as the Hong Kong Stock Connect Central Enterprise Dividend) is the most representative.
The index is constructed to exclude inactive securities with an average monthly turnover rate of less than 0.1% over the past 12 or 3 months, unless their average daily turnover is more than HK$50 million.
At the same time, the following conditions must be met:
1. Actual control of central enterprises;
2. Dividends in the past 3 consecutive years, the average dividend yield in the past 3 years and the average dividend yield in the past 1 year are both greater than 0 and less than 1;
3. Rank the top 50 according to the average dividend yield of the past 3 years from high to low.
It can be seen that the index selects 50 stocks that are actually controlled by central enterprises, have stable dividend levels and high dividend yields to build an index, and weighted them according to dividend yields, which can reflect the overall performance of listed companies with higher dividend yields in Hong Kong Stock Connect.
From the perspective of index characteristics, there are the following trends:
1. The industry is relatively balanced, focusing on pro-cyclical. As of the end of 2023, the Hong Kong Stock Connect Central Enterprises Dividend Index covers 15 Shenwan first-class industries, of which banks account for 20.29%, non-bank finance accounts for 14.06%, communications account for 10.51%, real estate accounts for 9.01%, and transportation accounts for 8.03%.
2. The rate of return is relatively stable. From 2021 to 2023, the dividend yield of Hong Kong Stock Connect central enterprises is 2.99%, significantly better than the -34.16% of the CSI 300, -18.31% of the ChiNext and -37.40% of the Hang Seng Index. In terms of annual terms, the index rose by 17.72% in 2021, which is a good increase, and in 2022 and 2023, it will fall by 10.71% and 2.02%, respectively, which is significantly better than the above indexes.
3. Higher dividend yield. Thanks to the above-mentioned stable returns and dividend stock selection strategies of central enterprises, the dividend yield of the index has been relatively stable, and the dividend yield of the index has been stable at about 7% in the past 10 years, and there is an upward trend in recent years, of which it has climbed to 8.04% by the end of 2023, which is significantly better than most wealth management products. Higher stock yields can smooth out stock price fluctuations and bring a higher investment experience.
4. The maximum drawdown is small. Judging from the maximum drawdown from 2021 to 2023, the dividend of Hong Kong Stock Connect central enterprises is -34.45%, which is significantly smaller than the -52.75% of the Hang Seng Index and -53.35% of the Hang Seng Hong Kong Stock Connect. In this round of major adjustments, the dividends of central enterprises rely on the stable performance and higher dividends of sample stocks to reduce the loss of assets.
On the whole, the CSI Hong Kong Stock Connect Central Enterprises Dividend Index has the characteristics of high dividend rate, stable performance, stable returns, overall drawdown and low volatility, which can provide a better investment experience and can be used as an alternative to the allocation target of Hong Kong stocks.
At present, ChinaAMC CSI Hong Kong Central Enterprises Dividend ETF (subscription code: 513913, trading code: 513910) tracks the above indexes.
As of January 19, 2024, the index is trading at just 4.47x P/E, which is in the bottom zone of 7.45% from a historical low to high, and is in a good value investment zone.
数据来源：同花顺 iFinD，2024/1/19
During the fund subscription period, you can enter the subscription code through the client of the brokerage company - the on-site fund menu, and you can trade through the trading code after listing.
ChinaAMC has experience in 18 index investment management, and equity ETF has ranked first in the industry for 18 consecutive years, and is the only fund company in China that has been awarded the "Passive Investment Golden Bull Fund Company" award for seven consecutive years.
Interested netizens can pay attention to the ChinaAMC CSI Hong Kong Central Enterprises Dividend ETF (subscription code: 513913, trading code: 513910), through which you can share the revaluation of central enterprises and grasp the investment opportunities of high dividends.
Note: Funds are risky and should be invested with caution. The above content is personal opinion only and is for reference only and does not constitute any investment advice.