On October 14th, dividend-themed ETFs experienced a collective rise, with the high dividend theme of Hong Kong stocks standing out. By the close of the market that day, the Hong Kong Dividend ETF and the Central Enterprises 40 ETF had risen by 4.27% and 4.16% respectively, with at least 12 other dividend-themed ETFs increasing by more than 3%.

Analysts have indicated that as the initial phase of widespread gains has passed, market fluctuations and divergence have increased the demand for risk avoidance among capital, thus strategies with high cost-effectiveness and certainty, such as dividend strategies, have once again attracted attention from funds.

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On the same day, the State-Owned Enterprise Dividend ETF under HuanAn Fund announced that due to the ETF's secondary market trading price being significantly higher than the reference net value of the fund shares, resulting in a substantial premium, the ETF was suspended from trading from the market opening until 10:30 AM. Prior to this, on October 12th, PingAn Fund's State-Owned Enterprise Mutual Win ETF and GuoTai Fund's Central Enterprise Mutual Win ETF also successively issued announcements, reminding investors to be aware of the premium risks in secondary market trading prices.

The high premium performance of these three central and state-owned enterprise-themed ETFs may reveal a common trend — in the current market where themes are continuously differentiating and evolving, dividend strategies are making a comeback. According to the strategy team at Caitong Securities, high dividends made a comeback in the second half of last week, with the central bank's unexpectedly accelerated implementation of the "Securities, Fund, Insurance Company Swap Facility (referred to as SFISF)", catalyzing market capital preferences to shift from the previous focus on technology growth to high dividend targets represented by Chinese characters and large finance.

"As market sentiment cools and the market adjusts its expectations for U.S. interest rate hikes, the A-share market has seen profit-taking and a wait-and-see sentiment. High dividend sectors such as banks and coal have shown relatively strong resistance to falls, indicating investors' demand for risk avoidance in market fluctuations," said Li Meicen, the chief analyst of Caitong Securities' strategy.

On the other hand, capital flow monitoring also reflects the same trend. Data from East Money Choice shows that on October 14th, the banking sector received a net inflow of 2.5 billion yuan from the main funds, second only to the semiconductor industry, and the net inflow of ultra-large orders also reached 2.592 billion yuan. Among them, Industrial and Commercial Bank of China and Agricultural Bank of China received net inflows of 583 million yuan and 582 million yuan respectively, ranking third and fourth in the entire market.

Why has the dividend strategy regained widespread market attention? Previously, on October 10th, the central bank officially announced the creation of the first "Securities, Fund, Insurance Company Swap Facility", supporting qualified securities, fund, and insurance companies to exchange high-grade liquidity assets such as bonds, stock ETFs, and Shanghai-Shenzhen 300 constituent stocks for national treasury bonds and central bank bills from the People's Bank of China, with an initial operation scale of 500 billion yuan.

"The central bank's innovative swap facility is of great significance, injecting confidence into the capital market in a broad direction, which is conducive to the revaluation of dividend asset values," said GF Securities. Leveraging through secondary pledge financing for investment in the stock market is a leveraged behavior, and the core demand for adding leverage to institutional funds is still to enhance the inherent stability of the capital market and reduce market volatility. Therefore, institutions are more motivated to prioritize high market value, high dividends, central and state-owned enterprises, and low valuations, and other high-quality assets with stability characteristics.

Recently, Liu Rui, Deputy General Manager and Chief Multi-Asset Investment Officer of BlackRock Jianxin Wealth Management, also stated in an interview with the Securities Times that the logic of dividend strategies or state-owned enterprise reforms has not changed much. With the downward trend of long-term national debt yields and the background of "asset scarcity", dividend strategies or state-owned enterprise reforms and other directions are relatively stable and have small fluctuations, still offering good investment opportunities.

At the same time, central and state-owned enterprises, known for their high dividends, are actively responding to the call of the financial policy combination on September 24, continuously releasing positive signals through share buybacks and increases to boost investors' confidence in the long-term value of their own companies.On October 14th, China Merchants Shekou, China Merchants Port, China Merchants Shipping, China Merchants Highway, Sinotrans, Liaoning Port Shares, China Merchants South Oil, and China Merchants Property Management, a total of 8 listed companies under China Merchants Group, simultaneously disclosed announcements of share repurchase or increase plans. Preliminary estimates indicate that the cumulative amount limit for the aforementioned increases and repurchases is nearly 5 billion yuan.

Amidst the ongoing heat, how much cost-effectiveness does the dividend strategy still have? Wei Jianrong, Chief Analyst of Financial Engineering at Kaiyuan Securities, stated that the position of the dividend low-volatility sector has been maintained at a historical low level of around 2% since August 31, 2021, with the current position at 2.1%, which is not yet crowded; the position of the China Special Valuation sector increased to 7.7% on August 2nd this year, close to the historical high level, and then gradually decreased, with the current position at 5%; the position of the China-headquartered central enterprise sector began to decrease from July 26th this year, with the current position at 4.8%.

Yu Mingming, Chief Analyst of Financial Engineering at Cinda Securities, also provided a similar viewpoint. She judged that looking forward to the future market, dividends have seen a relatively lower rebound strength compared to the market, thus their relative valuation has fallen back, and the volume and price congestion have been well released; on the capital front, dividend ETF investors have made a significant net sell at the high point of this market trend. Therefore, the absolute returns of dividends are expected to rise with the A-share market. Although the excess returns may be weaker than the market in the medium-term rebound trend, under the support of multiple stimulus policies, the cyclical dividends still have long-term investment value.

In addition, the changes in the premium/discount rates of related ETFs also show the improvement of the dividend strategy's congestion. Wind data shows that as of the close on October 14th, the CSI State-owned Enterprise Dividend Index rose by 3.02%, but the State-owned Enterprise Dividend ETF, Central Enterprise Mutual Win ETF, and State-owned Enterprise Mutual Win ETF closed down by 6.13%, 5.86%, and 5.26%, respectively. The reason is that their IOPV (Indicative Optimized Portfolio Value) premium/discount rates decreased from 10.06%, 8.94%, and 7.58% last Friday to 0.23%, 0.74%, and 0.07%, respectively.