$BANK OF CHINA(03988.HK) rose by more than three points today; Hong Kong-listed Chinese large-cap banks were pushed up steadily by Southbound capital and a preference for high dividends; $JPMorgan Chase(JPM.US) remained flat, while $HSBC HOLDINGS(00005.HK) saw a slight decline. On days when the US dollar strengthens, European and American large banks actually see little buying interest.
While both are bank stocks, one side is cashing in on the certainty of "interest rates not falling and attractive dividends," while the other waits for earnings season to verify net interest margins.
After this rally in Hong Kong's large-cap banks, dividend yields have been significantly compressed—returns for continuing to hold rely increasingly on stock price momentum rather than dividends themselves. How much room do you think remains for this high-dividend trade?
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