Defensive Traits and Dividend Strength Lift Coal-Themed Funds in Comeback

This year, the leading main line in China's A-share market has unexpectedly fallen on the coal sector, long regarded as a "traditional cyclical" industry. Wind data shows that as of October 29, the coal industry index had risen more than 23% year to date, while technology indexes such as semiconductors, AI computing power and AI applications have performed flatly this year. The sector rally has pushed up net asset values of related funds: as of October 28, several coal-themed index funds had returned more than 16% year to date. Behind coal's comeback is a joint restructuring of supply, demand and investor style. On the supply side, tighter safety inspections, low operating rates in major producing regions and reduced coal imports, combined with expectations for peak summer electricity demand and winter stockpiling, have kept coal prices high and volatile. On the demand side, thermal power supply assurance and the logic of coal chemicals as a substitute remain in place. More importantly, capital is shifting from chasing high growth toward the valuation of certainty-based assets with "low valuation, high dividends and stable cash flow." Leading coal companies generally offer dividend yields of 4% to 5%, and in a low-interest-rate environment their scarcity value has become more prominent. (China Securities Journal)