Hong Kong-listed banks outperform on dividend draw

Chinese mainland investors are snapping up the shares of mainland-based banks listed in Hong Kong for their high dividends and low valuations, putting aside concerns for now over rising bad debts as the economy slows.

The rush into mainland banks has coincided with a pickup in flows via a cross-border stock link, but analysts and traders said banks are outperforming as mainland investors shift away from volatile growth stocks to dividend plays.

Investors buying Hong Kong-listed shares, or H shares, of the major commercial banks have narrowed the valuation gap between stocks that trade on both bourses to a 21-month low, as measured by an index that tracks dual-listed stocks.