With frequent market favorites, China CITIC Bank and CITIC Securities successfully raised Fidelity Dividend Strategy Fund for the first time

Author: Erin Zhou

Since the beginning of this year, with the stabilization of China's economy and the gradual implementation of favorable policies, foreign capital has accelerated the return of Chinese assets. Foreign asset management institutions in China have also made frequent moves to actively deploy in the Chinese market.

Recently, Fidelity Fund has joined forces with China CITIC Bank and CITIC Securities to launch the Fidelity Joy Dividend Preferred Hybrid Securities Investment Fund. It is reported that the product has been raised and officially established on April 30, with a fundraising scale of 925 million yuan, with a brilliant performance.

Market sentiment is heating up, and foreign capital continues to flow in

With the market picking up and the valuation advantage of China's stock market compared to overseas markets, the optimism of investing in China has increased, and foreign institutions have shown optimism about RMB assets and the Chinese market.

A clear signal is that northbound funds continue to return sharply to increase their holdings of A-shares, with data showing that the cumulative net inflow of northbound funds into A-shares in the first quarter of this year was RMB68.223 billion, exceeding the net inflow of RMB43.7 billion in the whole of last year[i], while the State Administration of Foreign Exchange announced at a press conference on April 18 that foreign investors increased their net holdings of onshore bonds to US$41.6 billion in the first quarter of 2024, a significant rebound from US$23 billion in 2023[ii].

In addition, the macroeconomic data for the first quarter released not long ago exceeded market expectations and was in line with the policy target range, indicating that the effect of the steady growth policy since the end of last year has gradually emerged, and China's economy has made a good start. A number of international investment banks have also raised their expectations for China's economic growth in 2024, optimistic about the long-term trend and allocation value of the Chinese market in the process of high-quality transformation and development.

The new "National Nine Articles" were introduced, based on investor returns

On April 12, China's capital market ushered in another important institutional reform programmatic document, the State Council issued the "Several Opinions on Strengthening Supervision and Risk Prevention to Promote the High-quality Development of the Capital Market", also known as the new "National Nine Articles", which is following the two "National Nine Articles" in 2004 and 2014, and after 10 years, the State Council issued a guiding document on the capital market again, which reflects the great importance that the decision-makers attach to the development and reform of the capital market. At the same time, the China Securities Regulatory Commission (CSRC) issued supporting policy documents to strengthen delisting supervision and solicited public opinions on six system rules.

It is worth noting that the new "National Nine Articles" emphasize strengthening the supervision of cash dividends of listed companies and increasing the dividend yield to enhance the stability and predictability of shareholder returns.

In recent years, with the support of policy guidance, the willingness and intensity of dividends of A-share listed companies have been continuously improved. Since the promulgation of the new "National Nine Articles", the dividends of listed companies have also become one of the focus of the market's attention on the disclosure of recent A-share annual reports. It was observed that most of the cyclical and manufacturing sectors saw an increase in dividend yields last year, and the sectors with high dividend characteristics were still energy, utilities, transportation, banking, and telecommunications, which were more certain and defensive[iii].

According to exchange data, as of January 30, 2024, the scale of market-wide dividend theme ETFs has increased by more than 30 billion yuan since 2023, an increase of 141.69%. Some market analysts believe that combined with the current low market risk appetite, dividend assets may be reshaped in valuation.

China continued to increase its weight, and foreign public offerings picked up

In addition to raising their forecasts for China's economic growth, a number of foreign financial institutions have also expressed their long-term commitment to the Chinese market and continued to increase their weight. In April, a new member of the wholly foreign-owned public fund was added, and Allianz Fund was allowed to open, and a number of foreign public offerings announced the launch of new products, mainly equity.

On April 10, Fidelity Funds launched an active dividend hybrid fund, Fidelity Joy Dividend Preferred Mixed Securities Investment Fund, which is managed by veteran fund manager Zhou Wenqun. The strategy adopts the dual dimensions of high dividends and high quality, selects high-quality stocks with good fundamentals and sustainable dividend ability and potential, and focuses on more stable and sustainable investment returns during the market consolidation and volatility stage, so as to bring investors a better holding experience.

Fidelity believes that the current economic growth rate has entered a period of moderate stability, the low interest rate environment is expected to continue, and with the support of the policy side, it is expected that more A-share listed companies will increase their willingness to pay dividends, the relative attractiveness of dividend yields will increase, and the value of dividend investment may be further highlighted.

Take advantage of the trend and be optimistic about long-term development opportunities

Insisting on doing the difficult but right thing is the consistent belief of CITIC Financial Holdings, especially CITIC Bank Wealth Management. In recent years, CITIC Financial Holdings' subsidiary, represented by China CITIC Bank, has continued to advocate and insist on promoting the left-hand layout of equity assets, and has carried out concept transmission through customer accompanying brand activities such as the "Xinjian" large-scale investment report meeting covering major cities across the country, so as to increase customer stickiness and implement long-term investment thinking.

Since the second half of last year, with the policy catalyst, China CITIC Bank and CITIC Securities have actively introduced high-quality dividend investment strategies, hoping to bring investors a good investment experience. As a global dividend investment "leader", Fidelity's ability in active dividend management has been highly recognized by channel partners, and the nationwide channel coverage and wealth management strength of CITIC Bank and CITIC Securities have also promoted Fidelity's successful development in the domestic market. The successful fundraising of Fidelity Joy Dividend Preferred Mix is a successful case of CITIC Financial Holding and Fidelity Fund adhering to long-termism and realizing the reverse layout of the equity market.

Commenting on the successful launch of the dividend product and the cooperation with excellent channel partners, Huang Xiaoyi, Managing Director of Fidelity International China and General Manager of Fidelity Fund, said: "We are very pleased that our new dividend fund product has received a positive response from investors. The fund is one of the few actively managed dividend funds in the Chinese market, relying on Fidelity's professional research strength and strong stock selection capabilities, the fund issuance has achieved relatively outstanding fundraising performance, and it also marks the first time that we have introduced Fidelity's globally mature dividend product series to the Chinese market. We would like to thank China CITIC Bank and CITIC Securities for their strong support during the fundraising period, and this successful offering is another important outcome of our strategic partnership with CITIC Group last year. ”

"Fidelity has a robust product launch plan in place in 2024, followed by a number of equity, bond and multi-asset funds. We are committed to leveraging Fidelity's global experience and investment expertise in our home market to continuously enrich our product portfolio in China and help Chinese investors achieve their long-term financial goals. ”

As one of the first foreign asset management companies to enter the Chinese market and launch mutual fund business, Fidelity has always adhered to the long-term development vision of "in China, for China". Since the official launch of Fidelity Funds in early 2023, it has issued one equity fund and two bond funds. In addition, in February this year, Fidelity Fund announced that it would increase its registered capital from US$130 million to US$160 million (about RMB 1.154 billion) and set up a Beijing branch, demonstrating its commitment to the Chinese market and hoping to continue to strengthen communication with Chinese customers and deepen partnerships.

[i] Editorial丨Enhancing China's Economic Resilience and Potential, Attracting More Foreign Investment to Sustain Inflow (baidu.com)

[ii] Foreign Exchange Market Resilience Expects Foreign Institutional Investment in Domestic Bonds to Continue to Grow (baidu.com)

[iii] After the release of the new "National Nine Measures", the 2023 annual report quarter A-share dividend observation: what are the potential high dividends?(baidu.com)