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<Research>BOCOMI Expects High-Div. Strategy for HK Stocks to Keep Outperforming; Focus on Utilities, Telecoms, Energy & Banking sectors
BOCOMI recently released a report noting that during the annual meeting of global central banks in Jackson Hole in August, US Federal Reserve Chairman Jerome Powell gave a clearer ...
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<Research>BOCOMI Expects High-Div. Strategy for HK Stocks to Keep Outperforming; Focus on Utilities, Telecoms, Energy & Banking sectors
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BOCOMI recently released a report noting that during the annual meeting of global central banks in Jackson Hole in August, US Federal Reserve Chairman Jerome Powell gave a clearer signal for a US Fed rate cut to soon start. Meanwhile, global asset volatility has intensified amidst a trio of uncertainties, and investors urgently need to find certainty in the current environment.

Those uncertainties include the end of the rate hike cycle, with rising tail risks and uncertainty over whether the US economy will have a soft landing; uncertainty surrounding the outcome of the US election and its policy outlook; and the geopolitical conflict in the Middle East.

Related NewsDaiwa Downgrades CHINA RES POWER (00836.HK) to Underperform, Trims TP to $17.7
According to BOCOMI, although the high dividend strategy of Hong Kong stocks has been outperforming for some time in the past, it remained of high price-performance ratio and still has strong allocation value in the future. The Hong Kong high dividend strategy can benefit from three positive aspects in the medium to long term. The policy direction encouraged listed companies to further increase the level of dividends; under the background of "asset drought", the market demand for safe, stable and high-yielding bond-like assets will remain high; the change in accounting standards further favoured the systematic allocation of high-dividend assets by long-term funds represented by insurance funds.

In terms of the high dividend allocation strategy for Hong Kong stocks, BOCOMI believed investors may focus on the utilities, telecoms, energy and banking sectors, and comb through the industrial, real estate and consumer staples sectors from the bottom up, with a focus on the stability of the company's business and the changes in long-term capital expenditure needs. Preference should be made for stocks with weakened capital expenditure demand and improved cash flow. The broker believed due to the large differences in the stages of development and business attributes of the companies in these sectors, it is necessary to further screen the relevant bids from the bottom up.



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