There Is No Alternative was originally minted for other political motives but was famously revived to explain the environment with zero interest rates – TINA – you just had to buy equities. The question on my mind the past few weeks has been, has China now reached such a moment in time? So I wanted to share some random thoughts on the topic.
My thesis is simple – Chinese has no alternative to look for yields except stocks and particularly Hong Kong:
- Chinese property bubble has burst, it will be a long painful process before we see steady gains in the China property market.
- Interest rates have collapsed during 2024, The 7-day reverse repo is at 1.5% and the 10 year Gov Bond yield is at 1.6%. Neither with short duration, bank account, or long duration (Wealth Management products) can Chinese get any yield.
- Crypto is not easily accessible in China, left is basically gold, which is something Chinese do like but it’s not something to build a big portfolio solely on.
- The stock market has been really weak in both Mainland and Hong Kong, so from a momentum perspective it might not seem attractive either. But when stocks are cheap something is else is attractive – dividend yields!
- Mainland investors due to capital controls can’t access the outside world equity markets and buy products from other markets very easily. Hong Kong stands out as the only alternative.
So my conclusion is, Hong Kong listed companies with high dividend yields that are part of the Stock Connect (HK listed stocks mainlanders can buy from their local brokerage accounts within Mainland without restrictions) should see a lot of inflows in 2025.
So what does that list look like? Running a screen and matching it vs Southbound stock connect inclusion one can see there is quite a lot of juicy dividend cases to find.
All dividend stocks (included in Southbound Stock connect)
| Ticker | Company Name | Div Yield | MCAP |
| 9979 | Greentown Management Holdings Company Limited | 16.0% | $830 |
| 6110 | Topsports International Holdings Limited | 15.9% | $2,296 |
| 101 | Hang Lung Properties Limited | 12.6% | $3,684 |
| 1883 | CITIC Telecom International Holdings Limited | 11.6% | $1,085 |
| 3990 | Midea Real Estate Holding Limited | 11.2% | $539 |
| 327 | PAX Global Technology Limited | 10.6% | $663 |
| 467 | United Energy Group Limited | 10.4% | $1,147 |
| 440 | Dah Sing Financial Holdings Limited | 10.3% | $1,142 |
| 639 | Shougang Fushan Resources Group Limited | 10.3% | $1,649 |
| 2356 | Dah Sing Banking Group Limited | 10.3% | $1,460 |
| 3669 | China Yongda Automobiles Services Holdings Limited | 10.0% | $621 |
| 839 | China Education Group Holdings Limited | 9.8% | $1,130 |
| 590 | Luk Fook Holdings (International) Limited | 9.7% | $1,085 |
| 1361 | 361 Degrees International Limited | 9.6% | $1,095 |
| 303 | Vtech Holdings Limited | 9.6% | $1,683 |
| 546 | Fufeng Group Limited | 9.4% | $1,708 |
| 6808 | Sun Art Retail Group Limited | 9.4% | $2,220 |
| 1378 | China Hongqiao Group Limited | 9.2% | $13,985 |
| 3360 | Far East Horizon Limited | 9.1% | $3,071 |
| 817 | China Jinmao Holdings Group Limited | 9.1% | $1,615 |
| 598 | Sinotrans Limited | 8.9% | $4,628 |
| 1052 | Yuexiu Transport Infrastructure Limited | 8.8% | $811 |
| 386 | China Petroleum & Chemical Corporation | 8.6% | $101,012 |
| 14 | Hysan Development Company Limited | 8.6% | $1,558 |
| 857 | PetroChina Company Limited | 8.5% | $212,400 |
| 1908 | C&D International Investment Group Limited | 8.4% | $3,169 |
| 883 | CNOOC Limited | 8.2% | $120,799 |
| 548 | Shenzhen Expressway Corporation Limited | 8.2% | $3,278 |
| 659 | CTF Services Limited | 8.2% | $3,978 |
| 1675 | AsiaInfo Technologies Limited | 8.1% | $687 |
| 683 | Kerry Properties Limited | 8.1% | $2,866 |
| 1836 | Stella International Holdings Limited | 8.1% | $1,671 |
| 1138 | COSCO SHIPPING Energy Transportation Co., Ltd. | 8.0% | $6,513 |
| 363 | Shanghai Industrial Holdings Limited | 8.0% | $1,613 |
| 998 | China CITIC Bank Corporation Limited | 7.9% | $46,724 |
| 777 | NetDragon Websoft Holdings Limited | 7.8% | $672 |
| 968 | Xinyi Solar Holdings Limited | 7.7% | $3,490 |
| 1972 | Swire Properties Limited | 7.6% | $11,594 |
| 12 | Henderson Land Development Company Limited | 7.6% | $14,472 |
| 995 | Anhui Expressway Company Limited | 7.6% | $3,336 |
| 384 | China Gas Holdings Limited | 7.5% | $4,614 |
| 1929 | Chow Tai Fook Jewellery Group Limited | 7.5% | $8,488 |
| 3306 | JNBY Design Limited | 7.5% | $1,146 |
| 2386 | SINOPEC Engineering (Group) Co., Ltd. | 7.4% | $3,675 |
| 341 | Café de Coral Holdings Limited | 7.4% | $567 |
| 83 | Sino Land Company Limited | 7.4% | $9,121 |
| 1088 | China Shenhua Energy Company Limited | 7.2% | $109,102 |
| 2388 | BOC Hong Kong (Holdings) Limited | 7.2% | $33,779 |
| 1359 | China Cinda Asset Management Co., Ltd. | 7.2% | $5,643 |
| 1658 | Postal Savings Bank of China Co., Ltd. | 7.1% | $71,002 |
| 3323 | China National Building Material Company Limited | 7.1% | $3,741 |
| 3618 | Chongqing Rural Commercial Bank Co., Ltd. | 7.1% | $8,445 |
| 868 | Xinyi Glass Holdings Limited | 7.0% | $4,061 |
| 3988 | Bank of China Limited | 7.0% | $196,320 |
| 11 | Hang Seng Bank Limited | 7.0% | $22,941 |
| 1516 | Sunac Services Holdings Limited | 7.0% | $621 |
| 956 | China Suntien Green Energy Corporation Limited | 7.0% | $3,212 |
| 2666 | Genertec Universal Medical Group Company Limited | 7.0% | $1,165 |
| 3877 | CSSC (Hong Kong) Shipping Company Limited | 6.9% | $1,395 |
| 1044 | Hengan International Group Company Limited | 6.9% | $3,265 |
| 220 | Uni-President China Holdings Ltd | 6.9% | $4,248 |
| 2877 | China Shineway Pharmaceutical Group Limited | 6.8% | $840 |
| 819 | Tianneng Power International Limited | 6.7% | $1,154 |
| 2338 | Weichai Power Co., Ltd. | 6.7% | $15,304 |
| 173 | K. Wah International Holdings Limited | 6.7% | $709 |
| 941 | China Mobile Limited | 6.7% | $214,760 |
| 371 | Beijing Enterprises Water Group Limited | 6.6% | $3,087 |
| 667 | China East Education Holdings Limited | 6.6% | $723 |
| 1919 | COSCO SHIPPING Holdings Co., Ltd. | 6.6% | $31,104 |
| 1330 | Dynagreen Environmental Protection Group Co., Ltd. | 6.6% | $1,020 |
| 1199 | COSCO SHIPPING Ports Limited | 6.5% | $2,210 |
| 3328 | Bank of Communications Co., Ltd. | 6.5% | $67,981 |
| 177 | Jiangsu Expressway Company Limited | 6.5% | $9,128 |
| 939 | China Construction Bank Corporation | 6.5% | $197,487 |
| 3998 | Bosideng International Holdings Limited | 6.4% | $5,352 |
| 1113 | CK Asset Holdings Limited | 6.4% | $14,129 |
| 856 | VSTECS Holdings Limited | 6.4% | $911 |
| 576 | Zhejiang Expressway Co., Ltd. | 6.3% | $4,246 |
| 392 | Beijing Enterprises Holdings Limited | 6.3% | $4,310 |
| 1999 | Man Wah Holdings Limited | 6.3% | $2,318 |
| 552 | China Communications Services Corporation Limited | 6.2% | $3,847 |
| 1093 | CSPC Pharmaceutical Group Limited | 6.2% | $6,844 |
| 1958 | BAIC Motor Corporation Limited | 6.2% | $2,246 |
| 1398 | Industrial and Commercial Bank of China Limited | 6.2% | $301,751 |
| 2688 | ENN Energy Holdings Limited | 6.2% | $7,852 |
Since China interest rates collapsing is a recent 2024 phenomena, let’s combine above table with a filter of the stocks that are up on 1 and 3 month time period (basically showing some good recent momentum):
Dividend Stocks with good short term momentum
| Ticker | Company Name | Yield | MCAP |
| 440 | Dah Sing Financial Holdings Limited | 10.3% | $1,142 |
| 2356 | Dah Sing Banking Group Limited | 10.3% | $1,460 |
| 3669 | China Yongda Automobiles Services Holdings Limited | 10.0% | $621 |
| 546 | Fufeng Group Limited | 9.4% | $1,708 |
| 548 | Shenzhen Expressway Corporation Limited | 8.2% | $3,278 |
| 1836 | Stella International Holdings Limited | 8.1% | $1,671 |
| 998 | China CITIC Bank Corporation Limited | 7.9% | $46,724 |
| 995 | Anhui Expressway Company Limited | 7.6% | $3,336 |
| 3306 | JNBY Design Limited | 7.5% | $1,146 |
| 2386 | SINOPEC Engineering (Group) Co., Ltd. | 7.4% | $3,675 |
| 3618 | Chongqing Rural Commercial Bank Co., Ltd. | 7.1% | $8,445 |
| 3988 | Bank of China Limited | 7.0% | $196,320 |
| 3877 | CSSC (Hong Kong) Shipping Company Limited | 6.9% | $1,395 |
| 941 | China Mobile Limited | 6.7% | $214,760 |
| 3328 | Bank of Communications Co., Ltd. | 6.5% | $67,981 |
| 177 | Jiangsu Expressway Company Limited | 6.5% | $9,128 |
| 552 | China Communications Services Corporation Limited | 6.2% | $3,847 |
| 1398 | Industrial and Commercial Bank of China Limited | 6.2% | $301,751 |
| 3311 | China State Construction International Holdings Limited | 6.1% | $7,681 |
In this list I recognize quite a lot of the stocks. We have my large holding JNBY, we have another good company I looked at but passed on so far, Stella International. We have some financials and toll-road operators, some odd-balls like Fufeng Group which makes MSG for food and we have a group of Chinese SOEs, like SINOPEC, Bank of China, China Mobile etc.
There are three different types of bets to do from the above table:
- Stock picks – like JNBY & Stella – both are good stocks in my view
- Toll-road operators – these are very bond like in their investment, similar like holding a REIT, it could clearly be an interesting area. There are talks that REITs will be included in the Southbound connect, when that happens REITs are probably preferable for investors, but in the meantime this might be the next best thing.
- SOEs – clearly Mainlanders will be very familiar with these stocks, the problem I see is that most of these are also listed in Mainland China, although the yield often is higher in HK because of the valuation spread between HK and Mainland this is more a play on the spread than that investors will be reaching for these stocks for TINA reasons – but who knows, the yield is great on these and from a Mainlanders perspective owning ICBC or China Mobile is as safe as money in the bank (if you can accept some volatility).
To look further into this one can then also look at the daily flows of the Stock Connect (to literally verify if Mainlanders are buying). As JNBY was recently added to the Stock Connect it comes from a low level and is recently seeing steady buying by Mainlanders through the Southbound stock connect. Do they like the yield or like the company? Perhaps both..
Stella is not seeing the same type of inflows as JNBY but there must be others which fulfil all the criteria of being decent companies, with good yield and which Mainlanders are slowly accumulating.
So what if we then rank the original list after the last 3 month delta in percentage increase of holding by Mainlanders from Southbound connect?
High Dividend stocks ranked after last 3 months inflow from Mainland Southbound flows
| Ticker | Company Name | Div Yield | 3m Delta Southbound |
| 2386 | SINOPEC Engineering (Group) Co., Ltd. | 7% | 10.0% |
| 968 | Xinyi Solar Holdings Limited | 8% | 9.6% |
| 1088 | China Shenhua Energy Company Limited | 7% | 5.1% |
| 177 | Jiangsu Expressway Company Limited | 7% | 4.6% |
| 857 | PetroChina Company Limited | 9% | 4.3% |
| 1658 | Postal Savings Bank of China Co., Ltd. | 7% | 4.2% |
| 1093 | CSPC Pharmaceutical Group Limited | 6% | 3.8% |
| 9979 | Greentown Management Holdings Company Limited | 16% | 3.6% |
| 1398 | Industrial and Commercial Bank of China Limited | 6% | 3.4% |
| 598 | Sinotrans Limited | 9% | 3.4% |
| 6110 | Topsports International Holdings Limited | 16% | 3.4% |
| 1330 | Dynagreen Environmental Protection Group Co., Ltd. | 7% | 3.3% |
| 576 | Zhejiang Expressway Co., Ltd. | 6% | 2.8% |
| 552 | China Communications Services Corporation Limited | 6% | 2.8% |
| 839 | China Education Group Holdings Limited | 10% | 2.7% |
| 956 | China Suntien Green Energy Corporation Limited | 7% | 2.5% |
| 2338 | Weichai Power Co., Ltd. | 7% | 2.5% |
| 3669 | China Yongda Automobiles Services Holdings Limited | 10% | 2.3% |
| 2877 | China Shineway Pharmaceutical Group Limited | 7% | 2.2% |
| 3618 | Chongqing Rural Commercial Bank Co., Ltd. | 7% | 2.1% |
| 392 | Beijing Enterprises Holdings Limited | 6% | 2.1% |
| 2688 | ENN Energy Holdings Limited | 6% | 2.0% |
| 3306 | JNBY Design Limited | 7% | 1.9% |
| 819 | Tianneng Power International Limited | 7% | 1.9% |
| 995 | Anhui Expressway Company Limited | 8% | 1.9% |
| 1675 | AsiaInfo Technologies Limited | 8% | 1.8% |
| 3988 | Bank of China Limited | 7% | 1.6% |
| 1958 | BAIC Motor Corporation Limited | 6% | 1.3% |
| 939 | China Construction Bank Corporation | 6% | 1.3% |
| 1361 | 361 Degrees International Limited | 10% | 1.3% |
| 3328 | Bank of Communications Co., Ltd. | 7% | 1.3% |
| 386 | China Petroleum & Chemical Corporation | 9% | 1.3% |
| 868 | Xinyi Glass Holdings Limited | 7% | 1.2% |
| 341 | Café de Coral Holdings Limited | 7% | 1.2% |
| 998 | China CITIC Bank Corporation Limited | 8% | 1.1% |
| 101 | Hang Lung Properties Limited | 13% | 1.1% |
| 384 | China Gas Holdings Limited | 8% | 1.0% |
| 327 | PAX Global Technology Limited | 11% | 1.0% |
| 363 | Shanghai Industrial Holdings Limited | 8% | 1.0% |
| 1199 | COSCO SHIPPING Ports Limited | 7% | 0.9% |
| 1052 | Yuexiu Transport Infrastructure Limited | 9% | 0.9% |
| 777 | NetDragon Websoft Holdings Limited | 8% | 0.9% |
| 1044 | Hengan International Group Company Limited | 7% | 0.9% |
| 639 | Shougang Fushan Resources Group Limited | 10% | 0.8% |
| 2666 | Genertec Universal Medical Group Company Limited | 7% | 0.8% |
| 590 | Luk Fook Holdings (International) Limited | 10% | 0.8% |
| 1836 | Stella International Holdings Limited | 8% | 0.8% |
| 941 | China Mobile Limited | 7% | 0.7% |
| 3990 | Midea Real Estate Holding Limited | 11% | 0.6% |
| 683 | Kerry Properties Limited | 8% | 0.5% |
| 1113 | CK Asset Holdings Limited | 6% | 0.5% |
| 371 | Beijing Enterprises Water Group Limited | 7% | 0.5% |
| 1972 | Swire Properties Limited | 8% | 0.5% |
| 1359 | China Cinda Asset Management Co., Ltd. | 7% | 0.4% |
| 440 | Dah Sing Financial Holdings Limited | 10% | 0.4% |
| 220 | Uni-President China Holdings Ltd | 7% | 0.4% |
| 3877 | CSSC (Hong Kong) Shipping Company Limited | 7% | 0.4% |
| 303 | Vtech Holdings Limited | 10% | 0.3% |
| 2356 | Dah Sing Banking Group Limited | 10% | 0.3% |
| 467 | United Energy Group Limited | 10% | 0.3% |
| 12 | Henderson Land Development Company Limited | 8% | 0.3% |
| 667 | China East Education Holdings Limited | 7% | 0.2% |
| 3360 | Far East Horizon Limited | 9% | 0.2% |
| 1908 | C&D International Investment Group Limited | 8% | 0.2% |
| 2388 | BOC Hong Kong (Holdings) Limited | 7% | 0.2% |
| 1929 | Chow Tai Fook Jewellery Group Limited | 8% | 0.2% |
| 1883 | CITIC Telecom International Holdings Limited | 12% | 0.2% |
| 173 | K. Wah International Holdings Limited | 7% | 0.1% |
| 14 | Hysan Development Company Limited | 9% | 0.1% |
| 856 | VSTECS Holdings Limited | 6% | 0.1% |
| 883 | CNOOC Limited | 8% | 0.1% |
| 11 | Hang Seng Bank Limited | 7% | 0.0% |
| 1999 | Man Wah Holdings Limited | 6% | 0.0% |
| 83 | Sino Land Company Limited | 7% | 0.0% |
| 659 | CTF Services Limited | 8% | -0.1% |
| 1378 | China Hongqiao Group Limited | 9% | -0.3% |
| 6808 | Sun Art Retail Group Limited | 9% | -0.3% |
| 548 | Shenzhen Expressway Corporation Limited | 8% | -0.4% |
| 817 | China Jinmao Holdings Group Limited | 9% | -0.4% |
| 1516 | Sunac Services Holdings Limited | 7% | -0.5% |
| 546 | Fufeng Group Limited | 9% | -0.6% |
| 3323 | China National Building Material Company Limited | 7% | -1.5% |
| 1919 | COSCO SHIPPING Holdings Co., Ltd. | 7% | -2.0% |
| 1138 | COSCO SHIPPING Energy Transportation Co., Ltd. | 8% | -3.9% |
| 3998 | Bosideng International Holdings Limited | 6% | -8.2% |
To clarify the 3 month delta is the percentage change of total ownership of the company. Bosideng on the last row had Mainlanders selling 8.2% of all shares outstanding in the past 3 months. Interestingly enough quite a few of these toll-road and SOEs that had good returns the past 1 and 3 months are also the ones with good Southbound flows for the past 3 months. If one look at all the Southbound flow data, the companies with highest inflows are not really high dividend stocks, it’s some hot stock that Mainlanders speculate in, stocks like these.
| Company name | 3 month inflow |
| EASOU TECHNOLOGY HOLDINGS LIMITED | 34% |
| BEIJING FOURTH PARADIGM TECHNOLOGY CO., LTD. | 32% |
| SHIYUE DAOTIAN GROUP CO., LTD. | 26% |
| CHINA TRADITIONAL CHINESE MEDICINE HOLDINGS CO LIMITED | 21% |
| FLAT GLASS GROUP CO., LTD. | 18% |
| IMMUNEONCO BIOPHARMACEUTICALS (SHANGHAI) INC. | 16% |
| ROBOSENSE TECHNOLOGY CO., LTD | 15% |
| IMOTION AUTOMOTIVE TECHNOLOGY (SUZHOU) CO., LTD. | 15% |
| LAEKNA, INC. | 15% |
| XTALPI HOLDINGS LIMITED | 14% |
| 13% |
So the flows clearly move stock prices as if you look into the stock prices of above stocks, they have been moving a lot. Looking at historical flows won’t help much in predicting future flows, it’s more about skating to where the puck is going of course. And what I’m trying to say with all this rambling is that in general Chinese should be moving more into equities and if you are fairly skeptical and unwilling to buy stocks, probably a high dividend in something quite safe will convince you more easily. I see a pretty strong case for this at least.
As always, what are your thoughts?
Discount to book value would be interesting for me also.
But would it be interesting for regular Mainland investors looking for yield?
I was a bit quick to create all that data, some cells were empty in the HKEX data-set so for example Bosideng showed up as having outflows, when it was that the cell for the last date was empty. This was post was not about giving you super accurate data but more about showing a way of thinking and how you can slice the market to find some good investment ideas for 2025.