Funds are pouring into the high-dividend sector of Hong Kong stocks, experts warn to be cautious of two major investment traps

The explosive growth of the Hong Kong stock market in the first quarter of this year is noteworthy, with the Hang Seng Index rising by as much as 15.25%. However, as the global capital markets enter a period of turmoil, uncertainty has significantly increased since the second quarter. In this environment, many institutions and brokerages are advising investors to seek "safe havens" during market fluctuations, turning their attention to high-dividend companies with stable profit expectations, and using these assets as a core allocation to obtain relatively certain dividend income. However, several experts also warn to be cautious of the "high dividend trap." Dai Kang, Managing Director and Chief Asset Research Officer of GF Securities Development Research Center, believes that compared to the A-share and U.S. stock markets, the high-dividend strategy in the Hong Kong stock market performs more prominently and is a long-term winning strategy. However, traditional high-dividend investment methods can lead to two major traps, including the "dividend trap" and the "valuation trap," which need to be identified to select truly high-dividend varieties. (Securities Times)