We’ve been getting a lot of questions about China stocks of late. As many of you already know – China stocks have been on a tear in 2025 (and I mean that in a good way). Many China stocks have broken above 2024 highs, while certain stocks like Alibaba are up almost 60% since […]
The post How to invest in China stocks while earning stable dividend yields? appeared first on Financial Horse.
We’ve been getting a lot of questions about China stocks of late.
As many of you already know – China stocks have been on a tear in 2025 (and I mean that in a good way).
Many China stocks have broken above 2024 highs, while certain stocks like Alibaba are up almost 60% since Jan 2025. (Source: Google Finance as of 11 March 2025)
The bull case for China, is that stock valuations are very cheap, and price in a very pessimistic macro outcome.
As long as the macro outcome is less pessimistic than what is priced in – this could mean upside.
And recent policy signals such as the public reappearance of Jack Ma, Xi Jinping meeting with top Tech entrepreneurs (including Jack Ma), and recent statements from policy makers – suggest that China regulators may be looking to turn the page and start focusing more on the economy going forward.
We often receive reader feedback that they are not comfortable stock picking in China.
The regulatory climate and consumer sentiment moves too quickly, making it incredibly hard for a Singapore based investor to stock pick in China effectively.
And at the same time, there’s nothing that Singapore investors love more than high stable dividend yields.
So the latest Lion-China Merchants CSI Dividend Index ETF caught our eye – being an ETF that focuses specifically on high dividend yield China A-shares.
Disclosure: This post is sponsored by Lion Global Investors. All views and opinions expressed in this post are from Financial Horse.
This ETF from Lion Global Investors tracks the CSI Dividend Index.
This Index comprises 100 Shanghai-listed or Shenzhen-listed A shares with:
- High cash dividend yields
- Stable dividends and
- A certain scale and liquidity
They are weighted based on their dividend yields to reflect the overall performance of the high-dividend stocks in the A-share market.
You can have a closer look at the selection criteria below:
What does the ETF actually own?
As of 28 February 2025, the bulk of the asset allocation (80.3%) is listed in Shanghai, and the remainder in Shenzhen (19.1%).
Top 5 sector breakdown is:
- Financials (24.1%)
- Energy (20.4%)
- Industrials (18.7%)
- Materials (13.4%)
- Consumer Discretionary (12.5%)
Given that China real estate is at the epicenter of the deleveraging and it will take years to work through the demand supply imbalance – you would be pleased to note that real estate only forms 1.6% of the asset allocation.
Surprisingly – the Top 10 Index Constituents are very diversified across sectors.
You can see the breakdown below, and even the largest name (Cosco Shipping Holdings*) only makes up 2.4% of the Index.
Contrast this with the S&P500 where the MAG7** makes up almost 30% of the Index, and things couldn’t be more different.
*Securities referenced are not intended as recommendations to buy or sell.
**MAG7 is a group of high-performing and influential companies in the U.S. stock market, namely Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.
Given that this is a “Dividend” ETF.
What is the dividend yield?
You can see the 12-month net dividend yield for the China-Merchants CSI Dividend ETF over the past 4 years below.
Generally speaking, it fluctuates from the 4-5% range.
With the average net dividend yield for the past 4 years sitting around 4.6%.
You can see the historical performance below.
Compared against the benchmark CSI300, the Index does generally seem to perform well – with very strong excess returns in 2021 – 2023.
If you buy a China ETF today, you’re investing in China for the performance going forward, not the historical performance.
So… is this a good time to invest in China?
I’ve been saying this in a number of our other articles.
But China stock valuations are very cheap compared to the rest of the world.
The CSI Dividend Index has an average P/E ratio of 7.3x as of 28 February 2025.
This is much lower than the S&P500 which looks exorbitant at 25.4x (which is why it may appear that US stocks have downside risk if the macro surprises on the downside – as we’re seeing right now).
Meanwhile, China is running very dovish monetary policy, with the China 10 year yield sitting at 1.77% as of 28 February 2025. (Source: Bloomberg)
If and when China policy makers decided to stimulate the economy – this combination of rock bottom interest rates and cheap valuations could translate into upside for China stocks.
A lot of you have asked if China stocks have bottomed, so let’s explore this issue.
A fundamental problem that China faces is that real estate forms almost 30% of GDP (Source: CNA, September 2023), and when things shift to deleverage the real estate sector, it leaves a gaping hole in the economy.
If this hole isn’t filled properly, you’ll have weak consumer and business sentiment, and deflation – exactly what we’re seeing now.
China has tried to replace that hole with manufacturing, but when your manufacturing base is as big as China – any growth in market shares comes at the expense of someone else (ie. Japan, Korea, Germany etc).
It’s a beggar thy neighbour strategy, and in 2025 you can see how the neighbours are starting to strike back (ie. Trump and tariffs).
So there is a limit to how much China can grow its manufacturing sector.
The only realistic alternative to manufacturing in my view – is domestic consumption.
Which is why investors have been watching China policy makers like a hawk to see if and when they will unleash sufficient domestic stimulus to drive domestic consumption.
If and when they do unleash sufficient stimulus to drive domestic consumption (to the extent required to offset the real estate deleveraging).
Then given the combination of rock bottom interest rates, and cheap China stock valuations – there could very well be plenty of upside for China stocks.
Source: Screengrab from CCTV’s Xinwen Lianbo via The Straits Times, “Look who’s back: Alibaba’s Jack Ma shakes Xi’s hand at meeting of China’s business titans” by Lim Min Zhang, 17 February 2025 (https://www.straitstimes.com/asia/east-asia/look-whos-back-alibabas-jack-ma-shakes-xis-hand-at-meeting-of-chinas-business-titans)
And on that front – recent policy signals such as the public reappearance of Jack Ma, Xi Jinping meeting with top Tech entrepreneurs (including Jack Ma), and recent statements from policy makers – look promising.
And suggest that China regulators may be looking to turn the page and start focusing more on the economy going forward.
Which is what led to the recent rally in China stocks.
But of course, we’ll never know for certain until policy makers announce the concrete stimulus measures.
Source: Bloomberg, 28 February 2025
This Lion-China Merchants CSI Dividend Index ETF is managed by Lion Global Investors, which most of you would already be familiar with.
Lion Global Investors is one of the largest asset managers in Southeast Asia (total AUM is S$70.0 billion as of 31 December 2024).
They’re part of Great Eastern Holdings and a member of the OCBC Group and have a pretty long track record with ETFs in Singapore (listed 3 ETFs within 18 months between 2020 to 2022; listed 2 ETFs within 1H2024).
Lion Global Investors is also ranked among SGX’s top 5 ETF issuers by AUM (Source: SGX ETF Market Highlights 2024 as of 20 March 2025).
You may know them for 2 of the top 3 ETFs on the SGX: Lion-Phillip S-REIT ETF and Lion-OCBC Securities Hang Seng TECH ETF*:
*Securities referenced are not intended as recommendations to buy or sell.
They were also the Top 4 ETF issuer on SGX as of 28 February 2025, ETF issuer with highest number of ETFs (8 ETFs including this one), and most active ETF issuer in 2024 (launched 3 ETFs in 2024). (Source: SGX as of 10 March 2025).
An impressive track record.
The Initial Offer Period is from 10 March 2025 to 24 March 2025.
ETF is targeted to be listed on 28 March 2025.
You can buy both the SGD and CNH denominated ETF, depending on performance preference.
Management fee is 0.50%, which actually is decent for an ETF that tracks onshore A-shares.
If you’re interested to invest in Lion-China Merchants CSI Dividend Index ETF.
You can buy via any of the participating dealers below.
If you buy via OCBC ATM, the S$2 application fee is waived.
First 500 customers (each for POEMS and Tiger Brokers SG) receive S$12 cash credit/coupon for every S$5,000 invested (capped at S$600).
Further details below.
Disclosure: This post is sponsored by Lion Global. All views and opinions expressed in this post are from Financial Horse.
The content here is for informational purposes only and should NOT be taken as legal, business, tax, or investment advice. It does NOT constitute an offer or solicitation to purchase any investment or a recommendation to buy or sell a security. In fact, the content is not directed to any investor or potential investor and may not be used to evaluate or make any investment. Do note that this is not financial advice. If you are in doubt as to the action you should take, please consult your stock broker or financial advisor.
Disclaimer – Lion-China Merchants CSI Dividend Index ETF
This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. It is for information only, and is not a recommendation, offer or solicitation for the purchase or sale of any capital markets products or investments and does not have regard to your specific investment objectives, financial situation, tax position or needs. You should read the prospectus and Product Highlights Sheet of the Lion-China Merchants CSI Dividend Index ETF (“ETF”), which is available and may be obtained from Lion Global Investors Limited (“LGI”) or any of the its distributors and appointed Participating Dealers (“PDs”), for further details including the risk factors and consider if the ETF is suitable for you and seek such advice from a financial adviser if necessary, before deciding whether to purchase units in the ETF.
Investments in the ETF are not obligations of, deposits in, guaranteed or insured by LGI or any of its affiliates and are subject to investment risks including the possible loss of the principal amount invested. The performance of the ETF is not guaranteed and, the value of its units and the income accruing to the units, if any, may rise or fall. Past performance, payout yields and payments, as well as, any prediction, projection, or forecast are not necessarily indicative of the future or likely performance, payout yields and payments of the ETF. Any extraordinary performance may be due to exceptional circumstances which may not be sustainable. Dividend distributions, which may be either out of income and/or capital, are not guaranteed and subject to LGI’s discretion. Any such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value of the ETF. Any references to specific securities are for illustration purposes and are not to be considered as recommendations to buy or sell the securities. It should not be assumed that investment in such specific securities will be profitable. There can be no assurance that any of the allocations or holdings presented will remain in the ETF at the time this information is presented. Any information (which includes opinions, estimates, graphs, charts, formulae or devices) is subject to change or correction at any time without notice and is not to be relied on as advice. You are advised to conduct your own independent assessment and investigation of the relevance, accuracy, adequacy and reliability of any information or contained herein and seek professional advice on them. No warranty is given and no liability is accepted for any loss arising directly or indirectly as a result of you acting on such information. The ETF may, where permitted by the prospectus, invest in financial derivative instruments for hedging purposes or for efficient portfolio management. LGI, its related companies, their directors and/or employees may hold units of the ETF and be engaged in purchasing or selling units of the ETF for themselves or their clients.
The units of the ETF are listed and traded on the Singapore Exchange Securities Trading Limited (“SGX-ST”), and may be traded at prices different from its net asset value, suspended from trading, or delisted. Such listing does not guarantee a liquid market for the units. You cannot purchase or redeem units in the ETF directly with the manager of the ETF, but you may, subject to specific conditions, do so on the SGX-ST or through the PDs.
© Lion Global Investors Limited (UEN/ Registration No. 198601745D). All rights reserved. LGI is a Singapore incorporated company and is not related to any corporation or trading entity that is domiciled in Europe or the United States (other than entities owned by its holding companies).
Disclaimer – China Securities Index Co., Ltd.
All rights in the CSI Dividend Index (“Index”) vest in China Securities Index Co., Ltd. (“CSI”). CSI does not make any warranties, express or implied, regarding the accuracy or completeness of any data related to the Index. CSI is not liable to any person for any error of the Index (whether due to negligence or otherwise), nor shall it be under any obligation to advise any person of any error therein. The Fund based on the Index is in no way sponsored, endorsed, sold or promoted by CSI and CSI shall not have any liability with respect thereto.
Disclaimer – China Merchants Fund Management Company Limited
The references to the company name and logo of China Merchants Fund Management Company Limited in this material do not constitute a guarantee by China Merchants Fund Management Company Limited of the authenticity, accuracy and completeness of the relevant content, nor do they constitute a judgment or guarantee by China Merchants Fund Management Company Limited of the investment value and performance of the Lion-China Merchants CSI Dividend Index ETF. China Merchants Fund Management Company Limited assumes no liability for this material or the investors’ investment in the Lion-China Merchants CSI Dividend Index ETF.
Past performances of China Merchants CSI Dividend ETF and CSI Dividend Index neither are indicative of their future performances, nor constitute a guarantee of investment returns or any investment advice. Investing in funds involves risks, and caution is advised.
We’ve been getting a lot of questions about China stocks of late. As many of you already know – China stocks have been on a tear in 2025 (and I mean that in a good way). Many China stocks have broken above 2024 highs, while certain stocks like Alibaba are up almost 60% since
The post How to invest in China stocks while earning stable dividend yields? appeared first on Financial Horse.
