In 2024, global asset classes performed differently. Equity markets rose overall, precious metals remained strong, and US Treasury yields fluctuated at high levels. The domestic bond market was strong throughout the year, with A-shares rebounding from the bottom due to policy catalysts, with dividend assets performing particularly well. Looking ahead to 2025, major asset management institutions believe that dividend sectors, convertible bond markets, US Treasuries, and gold will be key focuses for allocation, whereas the opportunity in the bond market may shift from allocation to trading.
Bond Market Review and Outlook: From Allocation to Trading
In 2024, the domestic bond market performed strongly, displaying a "bull steepening" yield curve, with only brief corrections in April, August, and September. The bond market benefited from a loose monetary and low-interest rate environment, resulting in substantial annual gains. However, asset management institutions generally believe that the strong rally at the end of 2024 has exhausted the bond market's upward momentum, and the bond market may face a volatile downward trend in 2025.
Brokerage analysts point out that long-duration government bonds remain a tool for hedging equity risks but are not suitable for speculative gains. As the central bank is unlikely to pursue a zero-interest rate policy to maintain exchange rate stability, future bond market opportunities are likely to be structural. Asset management institutions suggest keeping track of fundamental changes in asset allocation and paying attention to the catch-up space for credit bonds, such as high-grade perpetual bonds and medium to short-duration municipal bonds.
Challenges and Opportunities in the Convertible Bond Market
In 2024, the China Securities Convertible Bond Index achieved an annual yield of 5.94%, but its performance was volatile, exhibiting a "W" shaped fluctuation. The convertible bond market frequently triggered price resets, and 2025 may present opportunities for double low convertible bond allocation. However, the market also faces dual challenges of shortening remaining maturity and declining market size.
Data shows that the average remaining maturity of the total convertible bond market is 2.92 years, with maturities of 79.2 billion and 110.6 billion scheduled for 2025 and 2026, respectively. Nonetheless, convertible bonds still retain some appeal in the broader fixed-income segment, especially when paired with dividend strategies or selected in sectors with dividend attributes such as energy, utilities, and banking.
Dividend Sector Continues to Attract Funds
The dividend sector has become one of the most dazzling asset classes in 2024, with bank stocks rising over 34% for the year, leading the A-share market. Wind data shows that index products labeled with "dividends" generally rose more than 20% annually, with the "Xinhua Zhong Chengxin Dividend Value Index" soaring by 46.65%.
Although the banking sector's revenue, net profit, and interest margin have all declined, the high dividend attractiveness of bank stocks is further highlighted against a backdrop of declining risk-free interest rates and reduced market risk appetite. Early 2025 is expected to be a peak period for interim dividend distribution for banks, with some dividend-focused investors likely to intensify their buying efforts.
Market analysts note that the current market environment remains conducive to dividend asset allocation, and if the average daily trading volume of A-shares remains below 1.3 trillion, the dividend sector will become an important direction for increased institutional allocation.
Major Asset Allocation Pace Follows Policies and Fundamentals
Looking forward to 2025, major asset management institutions recommend that investors pay attention to global economic fundamentals and policy dynamics. Opportunities in the bond market are shifting from allocation to trading; convertible bond markets and dividend assets hold relative advantages, while US Treasuries and gold maintain high allocation value in the international market. Investors need to flexibly adjust their positions in conjunction with market signals to seize opportunities amid volatility.
