The Zhitong Finance App learned that in the first half of 2026, CICC released a research report saying that in the first half of 2026, the A-share technology growth style benefited from the boom in the AI industry chain, high-end manufacturing, etc., and continued the structural market. Since July, negative narratives in the global AI industry chain have increased, compounded by tightening overseas liquidity expectations and rising uncertainty about the geographical situation in the Middle East. The overall performance of the A-share market has been poor, industry rotation has accelerated, and growth sectors that performed well in the previous period have clearly adjusted. Looking ahead to the future market, the importance of the “technology+dividend” dumbbell configuration structure is expected to increase. The medium-term industrial logic of technological growth is still valid, but short-term uncertainty and valuation fluctuations may increase, and high-quality dividends are expected to provide another type of allocation consideration in addition to the main growth line.
CICC's main views are as follows:
Since the third quarter, the A-share dividend style has been relatively dominant
In the first half of 2026, the A-share technology growth style benefited from the boom in the AI industry chain, high-end manufacturing, etc., and continued the structural market. Since July, negative narratives in the global AI industry chain have increased, compounded by tightening overseas liquidity expectations and rising uncertainty about the geographical situation in the Middle East. The overall performance of the A-share market has been poor, industry rotation has accelerated, and growth sectors that performed well in the previous period have clearly adjusted. As of October 9, the GEM Index and Science Innovation 50 were down 29.9% and 34.0% respectively from the end of June. China Securities dividends rose 11.5% during the same period, and defensive sectors such as coal, petroleum and petrochemicals, and banks performed relatively well (Chart 1). Since the beginning of the year, China Securities dividends have increased by 1.8%, ranking second only to Science Innovation 50 (+8.4%) and superior to the Shanghai Composite Index (-3.9%) and Shanghai and Shenzhen 300 (-6.8%) among major indices. Technological growth and dividend style showed a certain “seesaw” effect. Against the backdrop of increasing fluctuations in growth style and declining market risk appetite, the relative allocation value of dividend assets is worth re-examining.
Unlike the overall and trending market in the first half of 2022 to 2024, the dividend style has shown more phased and structured markets in recent years. From 2022 to the first half of 2024, the dividend style was one of the main lines with strong sustainability in the A-share and Hong Kong stock markets. The bank stated earlier that the three factors of high prosperity and scarce investment opportunities, tight capital balance in the stock market, and the “asset shortage” environment resonate as the main reason why the dividend strategy prevailed at the time. After the “924” market, the first two major factors were reversed. On the one hand, the AI industry chain boom is evolving at an accelerated pace, and opportunities for high growth are not scarce; on the other hand, trading is active, and incremental capital continues to enter the market and generate positive feedback on the money-making effect. Combined risk appetite has rebounded, the “asset shortage” logic has weakened, and the relative appeal of the dividend style has declined. However, the dividend-style allocation logic is not over. When external uncertainty rises, market risk appetite falls, or the main growth line is adjusted in stages, dividend assets can often show a relative return advantage with relatively steady profits and dividend returns and defensive attributes. For example, the dividend style showed relative performance during the tariff policy disturbance in April 2025, the conflict between the US and Iran in March 2026, and the period of repeated expectations and growth style correction in the AI industry chain since July 2026.
Dividend-style medium- to long-term allocation value and phased rebalancing opportunities
From the perspective of asset allocation, the dividend-style medium- to long-term allocation logic still holds true. The low domestic interest rate environment, medium- and long-term capital allocation requirements, and the continuous improvement of shareholder return mechanisms of listed companies together form medium- to long-term support for high-quality dividend assets.
Medium- to long-term capital continues to increase equity assets, and new insurance asset liability management regulations strengthen the need for stable income allocation. The policy level continues to guide medium- and long-term capital such as insurance and pensions into the market, compounding income claims in a low interest rate environment, and the allocation of insurance capital rights continues to increase. By the end of the second quarter of 2026, the total allocation of insurance funds, stocks and securities investment funds reached 6.4 trillion yuan, an increase of 12.1% over the beginning of the year, accounting for 16.2% of the balance of capital utilization. The scale and proportion reached a record high; among them, the share allocation ratio had increased sequentially for 8 consecutive quarters. Under the new accounting standards, changes in the fair value of FVOCI shares are included in other comprehensive income and do not directly affect current net profit, and eligible dividend income can be included in current profit and loss, which helps balance long-term dividend returns and income statement stability, and enhances the motivation for insurance to allocate high-dividend assets. According to the 2026 interim report, listed insurers generally increased their allocation of FVOCI shares, and FVOCI's share of the stock portfolio increased by 5.5 ppt to 46.3% compared to the beginning of the year. At the same time, the August 2026 “Measures for the Management of Assets and Liabilities of Insurance Companies” further strengthened the cost-benefit matching requirements for assets, liabilities, and clearly required personal insurance companies to have a net investment income coverage ratio of not less than 100%, which is expected to further enhance the long-term allocation of insurance capital's demand for stable dividend equity assets.
The improvement of the dividend system and the improvement of corporate cash flow have promoted a steady increase in the dividend level of listed companies. Since 2023, the policy has continued to strengthen the dividend orientation of listed companies, and the “15th Five-Year Plan” plan outline was further proposed to improve the dividend incentive and restraint mechanism for listed companies and promote the normalization and institutionalization of the dividend mechanism. According to the press conference of the State Information Office in September 2026, since the new “National Nine Rules”, listed companies have accumulated dividends and repurchases of more than 7 trillion yuan, more than 2,000 companies have paid dividends for 5 consecutive years, and more than 1,000 companies have launched mid-term dividends, and the frequency and amount of dividends have continued to increase. In 2025, the total cash dividends of A-share listed companies reached 2.4 trillion yuan, and the overall dividend ratio rose to 44.9%, all of which reached record highs; the total amount of cash dividends implemented and planned to be implemented in mid-2026 was about 72.9 billion yuan, and the number and scale of dividend companies continued to be high since 2024. The bank believes that as the profit quality and cash flow of listed companies improve, and the dividend incentive and restraint system continues to improve, the overall dividend level of A-shares is expected to maintain a steady upward trend.
In an environment of low interest rates, the relative return advantage of equity bonds is still quite prominent. As of October 9, the TTM dividend rate of the China Securities Dividend Index was 4.24%, and the TTM dividend ratio of 2.75% for the Shanghai and Shenzhen 300 was 2.75%, all significantly higher than the 10-year treasury bond yield of 1.69%. In the context of domestic interest rate centers remaining low, stable cash dividend assets still have good investment appeal compared to traditional low-risk assets such as bonds and deposits.
The relative allocation appeal of the short to medium term dividend style has improved. The three conditions that supported the full advantage of dividends in the first half of 2022 to 2024 — scarce investment opportunities, tight capital balance, and an “asset shortage” environment have not been fully recovered. However, the rising volatility of high growth opportunities and the recent tightening of market risk appetite and marginal funding may bring about more sustainable dividend allocation requirements compared to the past two years.
Total macroeconomic recovery flexibility is limited, and profit growth is still dominated by structural opportunities. The fundamentals of the domestic economy have been moderately restored, and the export and AI industry chains have remained strong, but domestic demand and real estate are still weak, and the breadth and flexibility of policy transmission and recovery remains to be seen. The overall profit growth rate of A-shares may have declined sequentially in the third quarter, and the upstream energy raw materials and TMT sector is expected to continue to grow at a high rate.
Market risk appetite gradually declined, and incremental capital was slowing down. Although long-term trends in the AI industry have not changed, recent market concerns about overseas capital expenditure return cycles, ARR growth falling short of expectations from major model manufacturers, and external restrictions in the optical module sector have heated up. Combined with high valuations and concentrated positions on some popular racetracks, increasing short-term fluctuations in the growth sector. Meanwhile, expectations of tightening overseas liquidity and the geographical situation in the Middle East are repeated, continuing to disrupt global risk appetite, and A-share trading activity has cooled marginally. In terms of capital supply, since July, the number of new A-share accounts opened and the share of newly established partial equity funds have declined markedly compared to the first half of the year, and the enthusiasm for incremental capital to enter the market has declined.
The rise in US bond interest rates has increased valuation sensitivity, and dividend assets have historically had a certain correlation with US bond interest rates. The bank's previous historical review shows that there is a certain correlation between the relative earnings of the A-share dividend style and the trend of interest rates on 10-year US bonds. After US bond interest rates enter an upward cycle, high dividend strategies are more likely to yield excess returns in the A-share market. Since July 2026, long-term interest rates on US bonds have continued to rise. In early October, 10-year and 30-year US bond yields both hit new highs since 2002.
Future market outlook: the importance of the “technology+dividend” dumbbell configuration structure is expected to increase
A high dividend strategy not only has defensive properties when fundamentals weaken and the stock market is adjusted, but may also obtain phased relative benefits based on stable returns and value attributes when fundamentals are slowly repaired, market ranges fluctuate, or slowly upward. Looking ahead to the future market, the medium-term industrial logic of technological growth is still valid, but short-term uncertainty and valuation fluctuations may increase, and high-quality dividends are expected to provide another type of allocation consideration in addition to the main growth line.
On the one hand, the recovery of the total domestic economy is moderate, but fields such as AI hardware, computing power infrastructure, semiconductors, and innovative pharmaceuticals still have relatively independent industrial boom logic and profit growth potential. Currently, the A-share AI industry chain as a whole is still in a healthy demand-driven expansion stage, and technology-growing enterprises that have a core competitive advantage and can achieve profitable growth still have bottom-up allocation opportunities. However, there is still uncertainty about the sustainability of overseas AI capital expenditure and commercialization returns. Combined with rising overseas inflationary pressure and the risk of liquidity contraction, the growth sector may face greater profit expectations and valuation fluctuations. On the other hand, against the backdrop of rising uncertainty about high growth opportunities and increased fluctuations in market risk appetite, investors are expected to pay more attention to profit certainty and stable cash flow. The domestic low interest rate environment, medium- and long-term capital allocation requirements, and continuous improvement of the dividend system provide medium- to long-term support for high-quality dividend assets, and are expected to play a role in providing stable cash returns and cushioning the risk of fluctuations in the growth sector.
Taken together, in an environment where total growth flexibility is limited, structural prosperity and increased market risk appetite fluctuations coexist, the “technology+dividend” dumbbell structure is expected to become an allocation choice that takes into account the elasticity of profit growth, shareholders' cash returns, and portfolio stability. The technology side suggests focusing on companies with clear industry trends, long-term competitive advantage and ability to realize profits; the dividend side focuses on high-quality companies with steady profits and cash flows, sustainable dividends, and reasonable valuations.
A-share high-dividend stock selection portfolio update
The total dividends of A-share companies continued to grow in 2025, but the dividend situation in the sector is divided, and high-dividend investments should pay more attention to the profit quality, cash flow creativity, and dividend sustainability behind dividends. The bank previously proposed an optimized stock selection idea of “high-quality free cash flow, stable high dividends, and medium dividend rates.” The high-dividend stock selection portfolio was updated based on the latest valuations, dividend rates, and profit and asset quality data disclosed in the 2026 semi-annual report.
Judging from the current stock selection results, in addition to traditional high-dividend sectors such as finance, energy, and utilities, 1) pan-consumer dividends are still an important source of high-quality, high-dividend assets. Companies selected for pan-consumer dividend, such as food and beverage, household appliances, textiles and clothing, light industry manufacturing, media, etc., have strong continuity. Most of the relevant enterprises are leading companies in the mature stage. They have certain channels and brand advantages, a stable industry competition pattern, and steady growth and cash flow. Selected companies in the pharmaceutical biology field mainly focus on consumer segments such as branded traditional Chinese medicine, OTC, and pharmaceutical retail. Relevant companies usually have relatively stable terminal demand, good profitability, and continuous dividend records. 2) Industrial manufacturing leaders are gradually entering a high-dividend investment perspective. More companies that meet the high dividend screening conditions are emerging in industrial manufacturing fields such as automobiles, electric power equipment, and mechanical equipment. As production capacity cycles improve in some manufacturing sectors and optimize the competitive pattern of the industry, leading enterprises with competitive advantages in technology, scale and market are expected to improve their cash flow and capital expenditure structures while increasing profitability, gradually unleash cash dividend potential, develop a “profit growth+stable dividend” shareholder return model, and increase the long-term allocation value of mature manufacturing leaders. 3) The high dividend characteristic is beginning to extend to the technology industry. The computer industry's cash dividend dividend rate in 2025 has increased compared to 2024, and the dividend rate has also improved markedly. Listed companies in the computer industry began to enter high-dividend portfolios in 2026. Some technology companies with strong cash generation capabilities, relatively manageable capital expenditure requirements, and a willingness to continue to pay dividends have begun to show certain characteristics of high-dividend investment, which is worth continuing attention.