High oil prices may still be a cyclical main theme; institutions: Q2 focus on dividends and new energy

Against a backdrop of external uncertainty, the high-dividend direction is drawing the attention of capital. Last week (March 23–March 27), among industry and thematic ETFs, the sector with the most inflows was the high-dividend sector, with inflows of 2.644 billion yuan. The China Merchants Dividend Quality ETF (159209) recorded net capital inflows for 21 consecutive trading days, totaling 760 million yuan.

In its view, China Aviation Securities believes that the duration of high oil prices may still be the main storyline for the market’s phased trading over the next one to two months. However, this round of the rally has not yet ended; if there is any adjustment in the second quarter, investors should be modestly and positively inclined instead. The correlation between April stock prices and earnings is the highest level for the whole year. The market has gradually entered a period of intensive financial-report releases, so focus on directions with fundamentals and earnings support. Structurally, in the second quarter, attention can be given to dividend/”high dividend” sectors and the new energy sector.

The CSI Dividend Quality Index (932315) is an innovative index that combines the dividend factor and the quality factor, covering 50 stocks with stable dividends, relatively high dividend yields, and strong earnings persistence. As of March 27, since the base date of December 31, 2013, the CSI Dividend Quality Total Return Index has accumulated a gain of 605.44%, significantly outperforming the CSI High Dividend Total Return (324.47%) and the High Dividend Low Volatility Total Return (324.25%).