Group 1 - The market is entering a window of expectation for the Central Economic Work Conference, with a lack of clear direction and consensus, leading to high volatility [3][4] - It is anticipated that the GDP growth target for 2026 will remain the same as 2025, with an increase in macro policy strength, including a potential rise in the deficit ratio and special long-term bonds [4][12] - The banking sector is facing significant adjustment pressure after a recent rally, with a current dividend yield around 3.9%, which is below the critical support level of 4% for high dividend logic [6][30] Group 2 - Historical analysis shows that before market bottoms, banks typically experience a phase of rising followed by a decline, with an average rise of 5-10% and a subsequent drop of 3-9% [6][20] - The recent performance of banks has diverged from major indices, with the banking index rising 8.3% while the ChiNext and Shanghai Composite indices have seen declines of 10.5% and 2.5% respectively [18][19] - The AI industry is currently in a "darkest hour," but long-term confidence remains strong, with a focus on sectors with clear performance support such as energy storage, military, storage, and engineering machinery [31][32]

Event and Commentary - The overall dividend performance has shown significant differentiation this year, with most dividend assets in the A-share market underperforming the broader market in the first half of the year, particularly concentrated in the banking sector, which rose by 13.1% while the CSI Dividend Index fell by 3.1% [1] - Following the "anti-involution" policy introduced by the Central Financial Committee and subsequent government plans to stimulate growth in key industries, commodity prices have surged since late June, leading to a notable recovery in industry sentiment and strong performance in high-dividend sectors related to the cycle [1][4] - Historical trends indicate that dividend strategies tend to outperform the market from November to April, primarily due to increased risk aversion and pre-emptive positioning for dividend announcements [1] Core Views - There is a clear differentiation in dividend assets this year, with recent policies favoring cyclical resources [3] - The banking sector has seen a significant rise, with the banking index increasing by 19.5% as of July 10, driven by valuation increases, while other high-dividend sectors have generally declined [3][4] - The decline in the banking sector's dividend yield is attributed to a significant drop in the rolling cumulative dividend amount over the past 12 months, although this decline is expected to stabilize [6] Market Environment - The macroeconomic environment remains supportive for high-dividend equity assets, with a continuation of low interest rates and expected inflows of incremental capital into the market [2][7] - The dividend payout ratio in the A-share market still has room for improvement, and there is potential for structural expansion in dividend assets beyond the banking sector, including insurance, coal, steel, and construction [2][7] Hong Kong Market Insights - Hong Kong dividend assets exhibit a higher dividend yield compared to A-shares, with the Hang Seng Index showing a 3.1% yield and the Hong Kong Central Enterprise Dividend Index at 5.6% [8] - The tax advantages of investing in Hong Kong through the Stock Connect program are expected to enhance trading activity and attract more investors [8] Key Products - Dividend Quality ETF (159758) tracks the CSI Dividend Quality Index, focusing on companies with high dividend payment rates and profitability [9] - Free Cash Flow ETF (159201) reflects the performance of companies with high and stable free cash flow levels [9] - Hong Kong Central Enterprise Dividend ETF (513910) targets high-dividend central enterprises within the Hong Kong market [10]