China dividend stocks back in vogue as AI trade fizzles out and bond yields fall

Shanghai bourse index shows growth of 3.8% for energy, banking and transport industry stocks, crushing a 0.2% artificial intelligence gain

The Shanghai Stock Exchange Dividend Index of 50 high-dividend stocks from the energy, banking and transport industries has risen 3.8 per cent this month, trouncing a 0.2 per cent gain in the chip-heavy Star Market 50 index.

If the momentum holds up, it will extend the outperformance of the dividend index to a second consecutive month. The gauge jumped 13 per cent in July, while the tech index slumped 26 per cent for its biggest monthly decline on record.

Meanwhile, dividend stocks have also become more attractive after China’s worse-than-expected July economic data rapidly drove the sovereign bond yields lower across the curves on expectations about further policy easing.

“The rebound in dividend stocks is a result of more visible interim results, repair of excessive declines and a rebalancing of investment styles after the tech rout,” said Zhao Yang, an analyst at Sealand Securities. “The gains are concentrated on resources companies, such as coal and petrochemicals.”