Looking back on the first half of the year, the A-share market seems to have been on a roller coaster, starting from the trough at the beginning of the year to rebound strongly, and then fluctuating and adjusting again, and the overall situation is still showing a volatile trend. However, the high-dividend sector has been booming and eye-catching.
The first half of the year ended with high dividends and high dividends
June 28, the last trading day of the stock market in the first half of the year. The Shanghai Composite Index closed at 2967.4 points, down 0.25% for the year; The Shenzhen Component Index closed at 8848.7 points, down 7.10% for the year; The GEM index closed at 1683.43 points, down 10.99% for the year.
Source: Wind; the performance of major A-share stock indices in the first half of 2024;
In the first half of the year, from the perspective of index performance, the large-cap value index performed strongly in the first half of the year, with a cumulative increase of 13.67%, of which the Shanghai Stock Exchange 50 and CSI 300 led the gains, up 2.95% and 0.89% respectively; Small-cap stocks, on the other hand, have adjusted more, contrary to large- and mid-cap stocks, with a cumulative decline of 14.63%.
Source: Wind; A-share style index performance in the first half of 2024;
Specific to the rise and fall of various industry sectors, in the first half of the year, the banking and coal sectors rose first, of which the banking sector rose by about 19.66% to rank first, and the cumulative gains of energy and utilities were 14.38% and 14% respectively.
Source: Wind; A-share industry performance in the first half of 2024;
According to the data, among the top 10 companies in the total market value of A-shares, ICBC surpassed Kweichow Moutai with a total market value of nearly 2 trillion yuan and topped the A-share market capitalization. At present, except for Kweichow Moutai, the list is in the banking and energy industries.
Source: Wind; A-share industry performance in the first half of 2024; Unit: 100 million yuan;
On June 28, CNOOC's share price hit a new high, closing at 33 yuan per share, an increase of 57% during the year. As a high-dividend energy sector, individual stocks continued to set new stock price records during the year.
Source: Straight Flush; CNOOC share price trend in 2024;
There is room for internal drive in valuation, and the trend is expected to be extended throughout the year
Major brokerages generally expressed optimism about the high-dividend sector at the strategy meeting. The report released by Goldman Sachs also said that China's dividend assets have not been fully valued, and the concept of high dividends is expected to continue to rise under the catalysis of various factors, which is expected to become a long-term trend.
Roughly the analysis can be found mainly for the following reasons-
1. The capital market is still in a period of adjustment
Historically, high-dividend assets have tended to generate excess returns during periods of market correction. Taking the dividend index as an example, in weak markets such as the first half of 2018, the first half of 2021, and 2023, the dividend index is significantly better than the broader market.
Source: Straight Flush; CSI Dividend Index and CSI 300 Chart;
2. The new "National Nine Articles" open a new paradigm of management
In the new "National Nine Articles" issued in April this year, it was once again clear that the dividends of listed companies will be strengthened, and risk warnings will be given to those who are not enough dividends. Since then, the enthusiasm of listed companies to pay dividends has increased significantly.
According to Wind data, 11 days after the release of the new "National Nine Articles", as many as 1,098 listed companies issued dividend plans.
3. Domestic interest rates continue to fall
Since the beginning of this year, the wave of interest rate cuts has been swept again and again, bank deposit interest rates have been declining, and some banks have removed long-term deposits and large-amount certificates of deposit. At this stage, the deposit interest rate is generally in the range of 1.5%~3%.
High-dividend assets have higher dividends, higher returns than bank deposits, wealth management or bonds, and lower risks than other equity assets, making them a better choice for "alternative savings".
4. Investors prefer defensive assets
Generally speaking, when the financial market is booming, investors tend to pursue high-risk assets that bring high returns; When the market is not developing well, they pursue assets with higher security and stability.
High dividends themselves have a "debt-like" effect of anti-volatility, high dividends, and stable value, and are more favored by market funds as a "defensive asset".
In the face of menacing high-dividend sectors, investors can participate in them by buying dividend concept stocks or industry-themed ETFs (such as banks, coal and other industry ETF funds).
*This article is for learning and exchange purposes only, and the types of funds and stocks in the content are for illustration purposes only and do not constitute any investment advice. Investment is risky, and you need to be cautious in your choice.