<h2>I. How is the cost-effectiveness of Hong Kong local stocks currently configured?</h2>1. Shareholder Returns: Hong Kong local stocks continue to reward shareholders with steady dividends. In recent years, the dividend payout ratio and dividend per share of Hong Kong local stocks have remained relatively stable. In 2023, the average dividend payout ratio of Hong Kong local stocks exceeded 80%; in the mid-year report of 2024, the average dividend per share was HKD 0.49. As of September 18, the dividend yields TTM of Hong Kong local stocks represented by the Hang Seng Hong Kong 35 Index and the Wind Hong Kong Local Stocks Index reached 5.8% and 7.6% respectively, at a high level since 2018.2. Fundamentals: Lower interest rates lead to reduced financial costs. The interest-bearing liabilities of Hong Kong local companies are mainly denominated in Hong Kong dollars or US dollars. The average financing cost of local stocks in 2024H1 was 4.33%, and with the US initiating a new round of interest rate cuts, subsequent financing costs are expected to decline. On September 18 (local time in the US), the Federal Reserve announced a 50bp rate cut, lowering the federal funds rate target range to 4.75%-5.00%; on September 19, the Hong Kong Monetary Authority announced a 50 basis point cut to the benchmark interest rate to 5.25%.3. Valuation: Value reassessment due to declining interest rates in Hong Kong. Previously, with the background of the rise in the yield of the US 10-year Treasury bond, the Hibor rate in the Hong Kong market rose rapidly, narrowing the spread between the dividend yield of Hong Kong local stocks. Since October 2023, as expectations of a Fed rate cut have been heating up, the Hibor rate has been declining, widening the spread between the dividend yield of Hong Kong local stocks and the Hibor rate. With further rate cuts in the US and Hong Kong, Hong Kong local stocks are expected to regain favor with investors.<h2>II. High-quality high-dividend dividend assets in Hong Kong local stocks are worth long-term allocation.</h2>It is recommended to focus on Hong Kong local stocks that are less affected by mainland China's real estate, have diversified businesses, global layouts, stable dividends, and strong buyback efforts.<ul><li>Comprehensive enterprises including real estate, telecommunications, etc.: The business structure is gradually diversified, with the proportion of cyclical businesses such as real estate development decreasing, while sustainable operating businesses such as property investment, utilities, and telecommunications contribute stable cash flow and profits.</li><li>Utilities: Maintaining a robust profitability, sustainable stable cash flow brings steady dividends.</li><li>Financials: Emphasizing shareholder returns, a higher dividend payout ratio and buyback expectations provide a safety cushion for stock prices.</li></ul>Finally, we list some high-dividend targets of Hong Kong local stocks that meet some of the current industry direction recommendations for reference, not as individual stock recommendations.<img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTMxMjg2OTM0OQ==?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTMxMjg2OTM0OQ=="/><img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MTQ1MjU1NjI1OQ==?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MTQ1MjU1NjI1OQ=="/><img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTIxMTk5MjA1MDU=?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTIxMTk5MjA1MDU="/><img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MTg4NjkzMzA0Mg==?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MTg4NjkzMzA0Mg=="/><img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTkxMDcwNjE1Ng==?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/LTkxMDcwNjE1Ng=="/><img src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MjE0MDI3NjA3Mg==?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://bang.xuangubao.cn/MjE0MDI3NjA3Mg=="/>Author: Zhang Yi Dong (S0190510110012), Li Yanlin, Song Jian, Chi Yuyi, Source: Zhang Yi Dong Strategy World, Original Title: &#34;[CICC Zhang Yi Dong (Global Strategy) Team] Riding the Good Wind - Fed Rate Cuts Benefit the Revaluation of High-Quality Dividend Assets in Hong Kong&#34;

Guosen Securities pointed out that the dividend payout ratio and dividend per share of Hong Kong local stocks have remained stable, with an average dividend payout ratio exceeding 80% in 2023. With the start of the U.S. interest rate cut cycle, the financing costs of Hong Kong local stocks are expected to decrease, and the dividend yield is also at a high level. It is recommended to long-term allocate high-quality high-dividend dividend assets, focusing on Hong Kong local stocks with diversified businesses and stable dividend payouts

- The article discusses the current value proposition of Hong Kong local stocks, highlighting stable shareholder returns with an average dividend payout ratio exceeding 80% in 2023.  
- It notes that recent interest rate cuts by the Federal Reserve and the Hong Kong Monetary Authority are expected to lower financing costs, positively impacting local companies.  
- The article suggests that high-dividend local stocks, particularly those with diversified operations and stable cash flows, are worth long-term investment consideration.

Zhang Yidong: Rise of Hong Kong local stocks