Institutions are bullish on high dividend strategies for three main reasons, and the Hong Kong Stock Connect dividend ETF continues to rise significantly.

On February 12th, the Hong Kong Stock Connect dividend ETF Guangfa surged in volume, with a gain of 0.82% by midday and a turnover of 92.024 million yuan. Zhongtai Securities stated that the current yield of the high dividend sector is more attractive than long-term bonds, with valuation still in a historically low range. The high dividend sector currently has allocation value, with the core reason being the combined support of international liquidity improvement, strong Renminbi exchange rate, and domestic policy expectations. Firstly, the international liquidity environment continues to improve, which is more favorable for the high dividend sector. Secondly, the marginal appreciation of the Renminbi exchange rate is conducive to improving fund structure. With the strengthening expectations of a weaker dollar, the pressure of Renminbi exchange rate fluctuations is temporarily easing, and foreign investments in A-shares are transitioning from "trading participation" to "medium to long-term allocation". Thirdly, the domestic policy environment provides medium-term support for the high dividend sector. Huayuan Securities believes that the loose environment persists, and policies in the coal industry supply side are expected to be strengthened, driving capacity reduction and increasing disturbance from clean energy sources such as wind, solar, and hydropower. It is recommended to seize the timing of policy implementation; opportunities may arise from weather changes leading to a decrease in wind, solar, and hydropower output and a sharp increase in coal demand. Currently, coal prices are at a cyclical low, starting from the industry background of high inventory disposal cycles, focusing on high dividend top coal enterprises. The Guangfa Hong Kong Stock Connect dividend ETF, along with its off-market connections, provides investors with a convenient entry point to allocate Hong Kong dividend assets, allowing for stable returns and long-term value.