While Hong Kong's tech sector has been grabbing headlines, its dividend-focused assets on the other end of the barbell strategy have quietly delivered impressive returns.

According to Wind data, over the past year (11/10/2024–11/10/2025), key Hong Kong dividend indices not only hit record highs but also outperformed their tech counterparts. The Hang Seng Stock Connect High Dividend (CNY) and Hang Seng Stock Connect High Dividend Low Volatility indices, both accounting for dividend reinvestment, surged 31.65% and 33.57%, respectively, surpassing the 28.02% gain of the Hang Seng Tech Index.

**Defensive Strength in Dividend Assets** The divergence between Hong Kong tech and dividend stocks became pronounced in October 2025. External factors, including escalating U.S.-China tariff tensions and U.S. government shutdown risks, heightened market volatility. As tech stocks faced pressure due to their sensitivity to risk appetite, investors shifted toward more stable dividend assets.

Meanwhile, after a strong rally, Hong Kong tech valuations appeared stretched, lacking fresh catalysts to justify further gains. This prompted capital rotation into reasonably valued dividend plays.

**Southbound Flows Validate the Trend** Despite market turbulence, southbound capital inflows remained robust, with 14 consecutive days of net buying (10/21/2025–11/10/2025). Year-to-date net inflows exceeded HK$1.3 trillion, a record high since the Stock Connect launch. Notably, cumulative net buying surpassed HK$5 trillion for the first time.

Sector-wise, financials, energy, consumer discretionary, and telecoms led southbound inflows, reflecting growing appetite for dividend-rich sectors.

**Low Rates Fuel Long-Term Demand** Insurers also ramped up allocations to dividend stocks amid IFRS 9 adoption, seeking stable returns to smooth earnings volatility. Hong Kong’s high-dividend stocks, offering yields of 5.53% (Hang Seng Stock Connect High Dividend CNY) and 5.69% (High Dividend Low Volatility), stood out versus mainland indices (sub-4% yields), even after factoring in a 20% dividend tax.

With China’s 10-year bond yield at just 1.81%, the yield gap underscores the appeal of Hong Kong dividend assets. Historically, current yields rank in the top 48.6% and 53.28% of observations since each index’s inception.

**Investment Vehicles for Dividend Exposure** For investors, ETFs provide efficient access to Hong Kong dividend stocks: - **Hong Kong Stock Connect High Dividend ETF (513530)**: Since its 2022 launch, it delivered 69.51% returns, outperforming its benchmark by 36.01%. Recent net inflows totaled RMB 259 million over 10 days (10/28/2025–11/11/2025), lifting AUM to RMB 24.96 billion. - **Hong Kong Stock Connect High Dividend Low Vol ETF (520890)**: Launched in 2024, it gained 38.07% through Q3 2025, with a联接基金 (feeder fund) soon available for off-exchange participation.

**Bottom Line** In volatile markets, blending growth and defensive assets—like dividend ETFs—can enhance portfolio resilience. While tech offers excitement, dividend stocks provide enduring value through steady payouts and downside cushioning.

*Data sources: Wind, fund reports. Past performance ≠ future results. Investing involves risks, including market, currency, and regulatory uncertainties.*