Chinese investors have been flocking to dividend stocks, taking shelter from market turmoil spurred by sell-offs in technology companies and K-shaped economic growth in the Asian nation.

Two key gauges of the mainland-listed companies with the highest dividend yield ratios outpaced the benchmark heading into October, when fears of financial tightening in the US and China’s flagging domestic demand weighed on investors’ risk appetite.

The Shanghai Stock Exchange Dividend Index of the 50 selected stocks has risen 2 per cent this month, while the CSI Dividend Index, which tracks a broader pool of 100 such stocks on the Shanghai and Shenzhen bourses, has gained 1.6 per cent. In comparison, the CSI 300 Index has fallen 4.3 per cent and the chip-centric Star Market 50 gauge has tumbled 11 per cent.

The two dividend indexes offer at least a 4 per cent dividend yield, trouncing the 1.65 per cent yield on China’s 10-year government bond.

The set-up has highlighted a major shift in investor sentiment, with the frantic artificial intelligence trade dominating the market for most of the year until recently. A hotter-than-estimated US inflation print has fanned speculation about interest rate increases either this month or in December, while the latest readings on China’s economic data reinforced the assessment that uneven growth may persist.

“Value may outrun growth in the following one or two years,” said Chen Gang, an analyst at Soochow Securities. “Liquidity and the industry trend may have both reached the turning points. Global central banks’ easing cycles are basically over and the resilience of AI hardware is probably waning. While we reckon that the AI revolution isn’t over yet, the next leg of investments will be more difficult.”Within the universe of dividend stocks, Chen said that he preferred resource companies, which have benefited from rising energy and commodity prices, to consumer names that were grappling with a weakened labour market.

Shanghai’s SSE Dividend Index was dominated by the energy and financial industries, which had a 34 per cent and 31 per cent weighting, respectively, at the end of September, according to a fact sheet. The most heavily weighted constituent was Cosco Shipping Holdings with a 5.3 per cent representation, followed by Guanghui Energy with 3.9 per cent and Shanghai Zhonggu Logistics with 3.6 per cent.

The CSI dividend gauge had financial stocks as its biggest industry component, carrying a 26 per cent weighting, while energy and industrial companies ranked second and third. Its top three constituents were the same as the SSE Dividend Index.

The 50 dividend stocks on the Shanghai bourse had an average dividend yield of 4 per cent, and those on the CSI gauge returned an average yield of 4.2 per cent, the fact sheets showed.

The recent decline in Chinese government bond yields has also made dividend stocks more appealing, with investors chasing fixed-income products in anticipation of weak economic growth. The yield on the 10-year bond is approaching its record low of 1.6 per cent.

Dividend stocks may continue to stand out, as China’s patchy economic growth leaves investors with fewer broad opportunities in the stock market.

“We maintain our more cautious stance on China equities,” Morgan Stanley said in a report last week. “Stronger exports and targeted policy fine-tuning should help defend the growth floor, but subdued domestic demand and ongoing household deleveraging remain constraints on a broader earnings recovery.”