On July 15th, the three major A-share indices experienced volatile consolidation, with the technology sector showing weakness. As risk-off sentiment intensified in the market, high-dividend yield assets such as insurance, baijiu (distilled spirits), and machinery performed strongly. Notably, the S&P China A-Share Dividend Index closed up 1.65%, accumulating a gain of 5.69% since the beginning of July, significantly outperforming the broader market and demonstrating strong defensive characteristics during the choppy session.

The popular and uniquely positioned ETF tracking this index, the SPDR S&P China A-Share Dividend ETF (562060), delivered a solid performance. It rose 1.69%, quietly achieving its fourth consecutive positive close, and moved above its five-day moving average. The closing price was 0.603 yuan, with daily turnover exceeding 42.28 million yuan.

Looking at the performance of its constituents, approximately 90% of the stocks in the index posted positive returns. Yealink Network Technology Co., Ltd led the gains with a surge of 10.69%. MYS Group Co., Ltd and Anhui Gujing Distillery Company Limited both hit their daily price limit-up. Stocks including Luzhou Laojiao Co., Ltd, Robam Appliances Co., Ltd, Jianghe Group Co., Ltd, and Focus Media Information Technology Co., Ltd rose over 5%, continuing their recent rebound. Teway Food Group Co., Ltd, Central China Media Co., Ltd, and Wuliangye Yibin Co., Ltd, among others, posted steady gains of over 4%. Overall, capital's preference for high-dividend blue-chips in sectors like baijiu and home appliances was evident, with multiple sub-sectors rallying in unison.

Fund Manager's Perspective: A Potential 'Sweet Spot' for High-Dividend Assets

Hu Yijiang, the fund manager of the SPDR S&P China A-Share Dividend ETF (562060), believes that following a significant correction, dividend-yielding assets have generally seen their dividend yields rebound to attractive levels, potentially entering a "sweet spot for allocation" that warrants the ongoing attention of patient capital.

Valuation Perspective: Correction Mitigates Risk, Yields Regain Appeal

After a notable pullback, the current dividend yield of these assets has returned to historically high percentile levels, re-emphasizing their allocation value. As of the end of June 2026, the latest dividend yield of the underlying S&P China A-Share Dividend Index was 5.59%, placing it at a leading level in the market. The spread over the 10-year Chinese government bond yield (1.74%) was a substantial 385 basis points, offering patient capital a rare allocation window in the current low-interest-rate environment.

Historical Perspective: Limited Downside, High Margin of Safety

Data shows that since 2020, the maximum drawdown of the S&P China A-Share Dividend Index was 22.27%. After reaching a historical high on March 17, 2026, the index had declined by 16.56% by the end of June 2026. Following historical corrections of a similar magnitude, market sentiment is typically fully released, suggesting limited momentum and space for further downside.

Fundamental Perspective: Index Rebalancing Optimizes Quality

Despite market volatility, the intrinsic quality of dividend stocks has not been impaired; it has been optimized through index rebalancing. Changes in market capitalization structure have not been accompanied by a weakening of profitability. Regarding dividends, the total cash dividends paid by all constituents of the S&P China A-Share Dividend Index for the 2025 fiscal year exceeded 800 billion yuan, with a dividend payout ratio of 39.55%. Core indicators such as the overall Return on Equity (ROE), dividend coverage, and stability of dividend payments for the index constituents remained robust. The index's attributes of "high dividends and stable earnings" remain pure, supported by solid fundamentals.

Volatility Perspective: Dividend Stocks Gaining Favor as Core Holdings

The one-year volatility of the STAR 50 Index was 4.92%, approximately 1.9 times that of the S&P China A-Share Dividend Index's 1.71%. Current market realized volatility has risen rapidly, with noticeable intraday style rotations. In this high-volatility environment, using dividend stocks as a core portfolio holding is becoming a mainstream choice for institutions.

For investors seeking to build a balanced portfolio with both offensive and defensive characteristics, the SPDR S&P China A-Share Dividend ETF (562060) and its feeder funds (Class A: 501029; Class C: 005125) may serve as quality core holdings for allocating to high-dividend assets and smoothing portfolio volatility.

Investors are reminded that recent market volatility may be significant, and short-term performance is not indicative of future results. Investors should make rational investment decisions based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.

The fund tracks the S&P China A-Share Dividend Index. The index's base date is June 18, 2004, and its release date is September 11, 2008. The total return version of the index (which reinvests dividends) recorded the following annual performances over the last five full years: 2021: +23.12%; 2022: -3.59%; 2023: +14.21%; 2024: +14.98%; 2025: +18.95%. The index's annualized volatility for those years was: 2021: 2.04%; 2022: 2.62%; 2023: 1.48%; 2024: 3.32%; 2025: 1.57%. The fund is issued and managed by China Universal Asset Management. Past performance of the fund or its benchmark is not a guarantee of future results. Fund investment involves risks. Investors should read the fund's legal documents, such as the Fund Contract and Prospectus, to understand its risk-return characteristics and choose products suitable for their own risk tolerance.