“Safe Haven” Sentiment Arrives — Public Fund Managers Say Hong Kong Stocks May Offer Dividend Advantages

Multiple public fund managers observe that market flows are seeking safe-haven assets, prompting renewed investor attention to the defensive qualities of dividend-bearing securities. When comparing dividend opportunities between A‑shares and Hong Kong stocks, the latter appear to present relatively higher yields and may therefore attract greater interest from insurance capital.
Dividend equities are showing signs of recovery after a period of underperformance during the rally led by innovative pharmaceuticals and artificial intelligence, when high‑growth names dominated investor allocations and dividend strategies lagged. Southern Asset Management notes that, before recent tariff-related news, market leadership was decisively growth‑oriented.

Technology themes such as semiconductors and AI drew substantial capital, producing a pronounced siphoning effect away from defensive dividend segments. In risk‑on environments driven by growth narratives, funds tend to prefer high‑growth exposures, leaving steady dividend strategies to underperform in the short term.

Entering the fourth quarter, however, the market has exhibited clear rotation signals. As of October 17, the Shanghai and Shenzhen indices recorded month‑to‑date declines exceeding 1% and 6% respectively, while the CSI Dividend Index advanced roughly 2.48% amid successive support from banking, insurance, and resource sectors. The Hang Seng China Central SOEs Dividend Index, whose constituents include China Nonferrous Mining, New China Life Insurance, COSCO Shipping Energy and multiple bank stocks, has likewise trended higher and is hovering near historical highs.

Fund managers emphasize that the current search for defensive exposure has restored the appeal of dividend strategies. Cui Lei of Southern Asset Management argues that the extent of further downside for growth sectors is difficult to forecast, and even after stabilization these segments may require protracted consolidation to repair momentum. With the third‑quarter earnings season approaching, stocks driven primarily by thematic narratives and lacking fundamental support face elevated scrutiny.

Under these conditions, low‑volatility dividend approaches exhibit several allocation merits. Dividend yields among mainstream targets have returned above the 4% threshold, enhancing the long‑term attractiveness of such positions. The banking sector has already experienced substantial correction; some bank shares have retraced approximately 15% from peaks and, following declines below their annual moving averages, have recently stabilized and staged rebounds that create a wider valuation margin of safety. Additionally, year‑end portfolio rebalancing and preparatory moves by absolute‑return managers positioning for 2026 are prompting incremental allocations into undervalued, high‑dividend equities, thereby directing fresh capital into dividend assets.

Zheshang Fund cautions that, in a low‑volume adjustment phase, high‑leverage crowded trades are vulnerable to forced deleveraging. Under that scenario, both the hit rate and payoff of chasing richly valued thematic leaders diminish, accelerating capital rotation toward lower‑valuation, higher value‑for‑money sectors.
When assessing relative value between A‑shares and Hong Kong listings, many public fund professionals highlight Hong Kong’s comparative edge. The Hang Seng China Central SOEs Dividend Index records a dividend yield of 6.02%, markedly above the CSI Dividend Index, while its price‑to‑book ratio stands at 0.61 and its price‑earnings ratio at 6.81, underscoring significant distributable income potential.

Industry research suggests that banks and expressway operators typify high‑quality dividend exposures. Current dividend yields on banks are roughly 5% in A‑shares and close to 6% in Hong Kong listings, and expressway stocks yield around 4% with fundamentals appearing adequately adjusted. Given relatively cheaper valuations in Hong Kong, these two sectors offer visible value propositions that have already attracted long‑duration buyers.

Xu Zhiyan of Huaan Fund expects insurance capital to become a meaningful source of incremental market demand, with Hong Kong dividend stocks a natural allocation destination. The low‑volatility, high‑yield profile of dividend sectors aligns with insurance liabilities, particularly while long‑term bond yields remain historically low. This dynamic supports the case for increased allocation to dividend strategies by insurers, creating durable medium‑ to long‑term demand. Policy support further reinforces the sector’s structural case.

Huachuang Securities highlights additional technical advantages of H‑shares, including discount characteristics and tax considerations: dividends received on H‑shares held via Stock Connect for 12 consecutive months can be exempt from corporate income tax under current rules. The internationalized nature of Hong Kong’s market also enables institutional investors to rebalance holdings dynamically, which can help insurance portfolios reduce overall volatility.

Recently, the banking sub‑sector has outperformed within dividend universes. Analysts contend that, under favorable policy conditions and with attention to preserving reasonable net interest margins, banks listed in Hong Kong may see gradual improvement in core earnings. Combined policy measures—local debt restructuring, real‑estate stabilization, and support for economic rebalancing—have materially alleviated tail lending risks, reducing pressure on asset quality and creating scope for valuation re‑rating in the months ahead.