Institutions believe that the introduction of the 2024 version of the “National Nine Rules” has strengthened the advantages of high-dividend sectors to a certain extent, and that the strategic allocation value of dividend strategies such as coal, electricity, banking, and telecommunications is increasing.
The Zhitong Finance App learned that on April 12, “Certain Opinions of the State Council on Strengthening Supervision and Risk Prevention and Promoting High-Quality Development of the Capital Market” (i.e. the new “Nine Rules”) was officially released. The Securities Regulatory Commission and the Exchange immediately issued more than 20 supporting documents, and the “1+N” policy system for the capital market was implemented one after another. Institutions believe that the introduction of the 2024 version of the “National Nine Rules” has strengthened the advantages of high-dividend sectors to a certain extent, and that the strategic allocation value of dividend strategies such as coal, electricity, banking, and telecommunications is increasing.
The current new “National Nine Rules” clarify the general requirements, and also set out eight main directions, namely strictly controlling issuance and listing entry, strict continuous supervision of listed companies, increasing delisting supervision, strengthening supervision of securities fund institutions, strengthening transaction supervision, promoting medium- and long-term capital entry into the market, further comprehensively deepening reform and opening-up, and promoting the formation of joint efforts to promote high-quality development of the capital market.
As a medium- to long-term guidance document for the capital market, the trend of the A-share market after the implementation of the new “National Nine Rules” is also a common concern of investors. Institutions generally believe that the advantages of high-dividend and high-dividend sectors are gradually increasing.
According to China Merchants Securities's opinion, unlike the previous focus on the “financing side,” the current “National Nine Rules” place more emphasis on investors as the center, which fully affirms the investment nature and wealth management attributes of the capital market. The bank found that after each “National Nine Rules” were introduced, they all played a huge role in boosting subsequent market performance.
For example, two months after the promulgation of the “National Nine Rules” in 2004, the market experienced a general rise. After the promulgation of the “National Nine Rules” in 2014, the A-share market experienced interpretations from structural bulls to overall bulls from January 2014 to June 2015, and ushered in another round of big bull markets after 1999-2001 and 2005-2007.
The Societe Generale Securities Research Report points out that with the introduction of the new “National Nine Rules” and the formation and implementation of the capital market “1+N” policy system, various measures such as strict regulation of issuance and listing, strengthening supervision of cash dividends, preventing detours and reducing holdings, deepening the reform of the delisting system, promoting medium- and long-term capital entry into the market, and continuing to expand long-term investment power will further consolidate market consensus on high-quality leaders and high-win rate assets characterized by high prosperity, high ROE, and high dividends, and the establishment of a unified front for high-win rate investments is expected to accelerate.
CITIC Securities said that the domestic economy is recovering steadily, the pricing system for major overseas assets is in disarray, and expectations for US dollar interest rate cuts have been lowered. Subsequently, with the intensive disclosure of economic data, corporate financial reports, institutional holdings, and the holding of the Politburo meeting in the second half of April, it is expected that the short-term game of the A-share market will become complicated, and more importantly, the implementation of the new “National Nine Rules” will consolidate the important foundation for the healthy development of China's capital market in the medium to long term. Whether in terms of short-term or medium- to long-term investment, the strategic allocation value of dividend strategies is increasing.
In terms of specific allocation, on the one hand, CITIC Securities suggests continuing to bias the dividend strategy, focusing on increasing dividend rates and governance improvements for central and state-owned enterprises, continuing to pay attention to utilities with stable returns on free cash, financial insurance with stable premiums, and banks that still have impressive dividend rate expectations and benefit from mitigating the risk of chemical debt, and benefit from trade-in home appliances. On the other hand, in addition to new productivity topics (domestic computing power, storage, autonomous driving), we focus on supply-side constrained varieties, such as copper, aluminum, oil, consumer electronics panels, farming, etc. Additionally, we can focus on the topic of rising prices for utility products.
Bank of China Securities, on the other hand, said that the 2024 edition of the “National Nine Rules” continued the regulatory tone of the March “Two Broad and Two Strict” series of policy documents by the Securities Regulatory Commission. It focused on responding centrally to key concerns in the early stages of the capital market, highlighting that the path of financial development with Chinese characteristics adheres to a people-centered value orientation. With the release of the 2024 version of the “National Nine Rules” as a starting point, China's capital market has officially entered a strong regulatory cycle. In terms of allocation, the dividend strategy still dominates. The high dividend, which was clearly retracted in the early period, is gradually entering the better cost performance range, which is worth focusing on. The introduction of the 2024 version of the “National Nine Rules” has strengthened the advantages of the high dividend sector to a certain extent.
It is worth noting that in recent years, the overall ROE and dividend ratio of Hong Kong stocks with high dividends and high quality central and state-owned enterprises represented by three barrels of oil, four major banks, and three major operators has shown a steady upward trend. Since last year, the high-dividend sector has continued to perform brilliantly, leading to the active layout of many 10 billion private equity firms. Listed companies' annual reports show that Gao Yi Asset and Ning Quan Asset all increased their positions with high dividend targets in the fourth quarter of last year. Meanwhile, at the beginning of April, Inhyo Asset publicly reflected on the rising market due to missing the high dividend target, stating that in the future, it will moderately increase the weight of the company's texture and management capabilities when selecting targets.
Related concept stocks:
petroleum coal
CNPC Co., Ltd. (00857): The company is the largest oil and gas producer and seller with a dominant position in China's oil and gas industry, and is one of the companies with the largest sales revenue in China. In 23Q1, CNPC achieved net profit of 43.6 billion yuan, +12.17% year-on-year and +49.88% month-on-month.
China Shenhua (01088): China's largest coal producer. The company said in November that as the country's latest round of work to optimize the layout of power points progressed, the company seized the thermal power development window period during the “14th Five-Year Plan” period and carried out renovation and expansion projects at existing high-quality power points. The power plant project currently under construction by the company is expected to be completed and put into operation in 2025 or before.
operators
China Unicom (00762): The 2023 semi-annual report revealed that the company's cumulative number of 5G industry application projects exceeds 20,000, covering all 60 categories of the national economy. Complete full-band 5G lightweight testing and verification in 8 major fields, including industry and electricity.
banks
Bank of China (03988): According to the Bank of China's three-quarter quarterly report, at the end of September, total customer deposits were 22689.045 billion yuan, an increase of 248.720 billion yuan over the end of the previous year, an increase of 12.31%. Among them, RMB customers in mainland China made deposits of 17709.096 billion yuan, an increase of 2137.485 billion yuan over the end of the previous year, an increase of 13.73%.
architectures
China Railway (00390): China Railway is one of the largest multi-purpose integrated construction groups in China and Asia. Galaxy Securities believes that the steady growth policy for the first quarter of 2024 continues. The issuance of additional trillion yuan treasury bonds has been completed, PSL has been restarted, and the issuance quota for early batches of special bonds is about to be implemented. It is expected that the growth rate of infrastructure investment may maintain a relatively rapid growth rate in the first quarter.