2025 A-share High Dividend SOE Rally: Defensive Flows & Market Sentiment Divergence

Event Insights

The Xueqiu post highlights that the A-share index’s resilience in 2025 is primarily driven by the rally in high-dividend SOEs in banking, energy, and coal sectors. These assets are attracting savings funds seeking fixed-income-like returns amid an “asset shortage” environment. While this has stabilized the market, it also reflects low risk appetite—with incremental funds failing to flow into key real economy sectors (e.g., manufacturing, biotech)—leading to a divergence between index performance and most investors’ actual experience.

Research Findings

Analyst reports confirm:

Defensive Flows: High-dividend SOEs are key defensive picks in a rate-down environment, with the CSI State-Owned Enterprise Dividend Index serving as a core indicator. Related ETFs (e.g., 159515) have seen rapid scale growth [1], reflecting sustained capital inflows.
Market Divergence: The CSI A500 index rose 21.34% in Q3 2025 [8], but investor sentiment remains disconnected from index gains. Savings are moving from bank deposits to equity markets, but most flows are concentrated in either high-dividend SOEs or tech growth sectors (AI, semiconductors), creating a “dumbbell-shaped” allocation pattern.
Structural Imbalances: Bank wealth management scale hit a record 32.13 trillion yuan [7], but equity allocation remains low, indicating lingering risk aversion.

Synthesis

Both event and research align on two key points: (1) High-dividend SOEs are acting as a market stabilizer via defensive savings flows; (2) The divergence between index performance and investor sentiment is rooted in concentrated capital allocation. This reflects a broader challenge: while the market shows surface strength, funds are not efficiently channeled to sectors driving long-term economic growth.

Risks & Opportunities

Risks: A potential reversal in interest rate trends could reduce the appeal of high-dividend assets, leading to volatility. The sentiment divergence may also erode investor confidence over time.
Opportunities: Investors can leverage the dumbbell pattern by balancing defensive high-dividend positions with selected tech growth stocks. Policymakers may need to introduce incentives to direct more funds toward real economy sectors.