In recent times, the Hong Kong stock market has found itself in a comparable predicament to the A-share market, experiencing turbulence and adjustmentsHowever, amidst this volatility, there exists a specific category of assets in Hong Kong that showcases remarkable resilience, often even strengthening against the market tideThese assets are none other than high-dividend stocks.

High-dividend stocks are characterized by their defensive attributes, which have long been associated with themThis is not surprising, especially when we consider that during periods of economic uncertainty or turbulence in fundamental aspects, dividend-paying assets tend to outperform othersInvestors often turn to these assets in an effort to seek stability.

It’s noteworthy that the Hong Kong stock market is particularly sensitive to overseas liquidity, influenced by global geopolitical dynamics and uncertainties, such as those stemming from the ongoing conflicts in the Middle East

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In light of the prevailing domestic and international uncertainties, high-probability investments are becoming a widely accepted consensus among many investorsThe trend is no different for the Hong Kong market, which serves as a haven for capital in unstable times.

When it comes to high-dividend assets within the HK stock market, two indices stand out prominently: the Hang Seng China Mainland Enterprises High Dividend Yield Index and the CSI Hong Kong Stock Connect Central State-Owned Enterprises Dividend IndexBoth indices are focused on high-dividend stocks in Hong Kong, and the corresponding Exchange-Traded Funds (ETFs) are the Hang Seng Dividend ETF and the Hong Kong Central State-Owned Enterprises Dividend ETFEach index consists of 50 constituent stocks, making a well-rounded representation of this asset class.

The distinction between these two indices lies primarily in the types of companies they select

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The Hang Seng index emphasizes enterprises from mainland China, while the CSI index focuses on state-owned enterprises accessible through the Hong Kong Stock Connect programThis simple yet crucial difference leads to considerable variations in the constituent stocks of each index, with only 23 overlapping names and entirely different top five weightings.

Furthermore, this differentiation in stock selection naturally reflects in the industry allocation of these indicesWhile both identify financial services as their leading sector, the subsequent sectors show marked contrastsThis diversity allows investors to choose indices based on their individual risk appetite and sector preferences.

Another critical metric to consider is the dividend yieldBased on 2023 data, the Hang Seng China Mainland Enterprises High Dividend Yield Index boasts a dividend yield of 7.81%, while the CSI Hong Kong Stock Connect Central State-Owned Enterprises Dividend Index stands at an even higher 8.04%. These yields significantly surpass the Hang Seng Index’s yield, which is recorded at a mere 4.2%, underscoring the appeal of dividend stocks at this time.

In summary, though both indices concentrate on high-dividend assets within Hong Kong’s stock market, they cater to different investment strategies

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If an investor prefers a stock selection that is not constrained to central state-owned enterprises and desires broad industry diversification, then the Hang Seng China Mainland Enterprises High Dividend Yield Index would be a suitable choice, with its corresponding ETF being the Hang Seng Dividend ETFConversely, for those bullish on high-dividend opportunities specifically within central state-owned enterprises, the CSI index and its ETF would be the preferred route.

Returning to the current market situation, it appears that the primary goal for global investors in the short-term may not be maximizing profits but rather prioritizing risk aversionFactors such as a potential economic recession in the United States or variations in interest rates like the yen's hike juxtaposed with the dollar's decline indicate significant shifts in capital flowThis environment, in fact, could benefit the long-undervalued Hong Kong stock market.

Historically, when markets experience significant short-term overbought conditions, they tend to oscillate or even correct themselves

However, from the current perspective, the liquidity outlook for Hong Kong stocks appears to be comparatively optimisticBeyond high-dividend assets, investors should also keep a close watch on sectors such as technology, the internet, and biomedicine, which not only have a relative scarcity in the HK market compared to the A-share market but also align with the broader trajectory of China's economic transformation.

It is important to note the differences in fees for A and C class funds during the subscription processA class funds charge a one-time subscription fee with no service fee, while C class funds do not impose a subscription fee but do charge a sales service feeThese varying fee structures could result in significant differences in long-term performance, making it essential for investors to read through the periodic reports of these products.

Lastly, an essential risk alert regarding T+0 trading is necessary

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