Market Review and Key Perspectives: For Hong Kong stocks, the Hang Seng Stock Connect China State-Owned Enterprise Dividend Index rose 2.36% last week, the Hang Seng Index increased 3.69%, and the Hang Seng Tech Index climbed 4.31%. For A-shares, the CSI SOE Dividend Index gained 3.89% last week, while the CSI 300 fell 1.24%. (Data source: Wind, as of July 31, 2026, all returns refer to corresponding total return indices).

The banking sector contributed notably to the Hong Kong Stock Connect SOE Dividend Index's rise last week. Hong Kong-listed mainland bank stocks strengthened collectively, with major state-owned and joint-stock banks such as Bank of Communications, Agricultural Bank of China, Bank of China, China Construction Bank, and China CITIC Bank leading the gains, becoming the core force driving the index upward. The strong performance of the banking sector is rooted in its solid fundamentals and prominent valuation advantages. High dividends are the most distinct feature of banks. In a low-interest-rate environment where the 10-year government bond yield is only around 1.7%, this level of dividend return is highly attractive to funds seeking stable cash income. Furthermore, the dividend policies of major state-owned banks have remained stable for a long time. In 2025, the six major state-owned banks distributed a total of over 420 billion yuan in dividends, providing investors with highly predictable cash returns.

Last week, the market style rotation accelerated further, with the trend of funds shifting from high-valuation tech sectors to low-valuation dividend sectors continuing. The core logic behind this capital rotation is the increase in risk aversion. Global markets have recently experienced heightened volatility, with repeated geopolitical conflicts and high U.S. Treasury yields suppressing risk appetite, prompting funds to turn to assets with prominent defensive attributes. After a rapid rally, the tech sector fell into high-level consolidation with significantly increased volatility, leading some funds to take profits and rotate into low-volatility dividend sectors. Simultaneously, domestic 10-year government bond yields remain persistently low at around 1.7%, intensifying the market's pursuit of deterministic returns. The current dividend yield of the Hong Kong Stock Connect SOE Dividend Index exceeds 5.6%, and the spread over the risk-free rate is over 3.9 percentage points, providing a sufficient safety cushion for allocating funds. The "bond-like" characteristics of high-dividend assets continue to strengthen. During an interest rate downcycle, their excess return advantage over bond coupons is evident.

The Hong Kong Stock Connect SOE Dividend Index offers higher dividend yields and lower valuations. The Hang Seng Stock Connect China SOE Dividend Index has a dividend yield of 5.23% (vs. 4.26% for the CSI Dividend Index), a PB of 0.60, and a PE of 7.27. Its total return index has accumulated a return of 146% over the past five years, outperforming the Hang Seng Total Return Index by 127%. The CSI SOE Dividend Index has a dividend yield of 4.22%, a PB of 0.89, and a PE of 9.14. Its total return index has accumulated a return of 61% over the past five years, outperforming the CSI 300 Total Return Index by 53%. (Data source: Wind, as of July 31, 2026).

Looking ahead, the low-interest-rate environment under the domestic rate-cutting cycle and the backdrop of a weak economic recovery both favor the dividend strategy. Under the guidance of market value management, central and state-owned enterprises (SOEs) have a strong willingness and ability to distribute dividends. The allocation value of the Hua An Hong Kong Stock Connect SOE Dividend ETF (513920) and the Hua An SOE Dividend ETF (561060) is relatively high.

Product Introduction for Hua An Hong Kong Stock Connect SOE Dividend ETF (513920)

The Hong Kong Stock Connect SOE Dividend ETF (513920) is the first ETF in the market to combine the three attributes of Hong Kong stocks, SOEs, and dividends. It is also the largest ETF tracking the Hang Seng Stock Connect China SOE Dividend Index (HSSCSOY), which includes high-quality, high-dividend SOEs listed in Hong Kong. Over-the-counter related products include: Hua An Hang Seng Hong Kong Stock Connect China SOE Dividend ETF Feeder Fund Class A (020866) / Class C (020867).

Product Overview for Hua An Hong Kong Stock Connect SOE Dividend ETF (513920)
Data source: Wind, Hua An Fund, as of July 31, 2026.

Product Introduction for the SOE Dividend ETF (561060)

The SOE Dividend ETF (561060) tracks the CSI SOE Dividend Index. This index selects 100 stocks from SOEs that have high cash dividend yields, relatively stable dividend payouts, and a certain scale and liquidity, reflecting the overall performance of representative high-dividend SOEs in the A-share market. Over-the-counter related products include: Hua An CSI SOE Dividend ETF Feeder Fund Class A (020461) / Class C (020462).

Risk Disclosure: The above is only an objective description of the current constituent stocks of the underlying index and does not constitute any investment advice or a guarantee of investment returns. The index compiler may subsequently adjust the index compilation scheme, and the composition and weights of index constituents may change dynamically. Please be aware of the risks associated with certain index constituents having significant weight or high concentration. This fund is a stock fund, which falls under the category of higher risk and higher expected return funds. It primarily invests in the constituent stocks and alternative constituent stocks of the underlying index. Its feeder fund aims to closely track the performance of the underlying index by primarily investing in the target ETF. The expected returns and risks of this fund are higher than those of money market funds, bond funds, and hybrid funds, and it has a risk-return profile similar to that of the underlying index. The fund management company does not guarantee a profit from this fund, nor does it guarantee a minimum return. Past performance of a fund does not predict its future returns. The performance of other funds managed by the fund manager does not constitute a guarantee of the fund's performance. Fund product returns are subject to volatility risk. Investment requires caution. Please carefully read the fund's contract, prospectus, and other fund legal documents for details. MACD golden cross signal formed, these stocks are performing well!