Chinese companies are poised to pay out record dividends this year as they step up efforts to boost investor confidence amid an outflow of foreign funds.
(Bloomberg) — Chinese companies are poised to pay out record dividends this year as they step up efforts to boost investor confidence amid an outflow of foreign funds.
Dividend payments by the nation’s biggest firms amounted to 1.5 trillion yuan ($206 billion) so far this year, surpassing the 1.27 trillion yuan given out in 2022, according to data compiled by Bloomberg. That’s helped dividend yields for companies on the CSI 300 Index to surpass 10-year sovereign bond yields for the first time.
The higher dividends is part of a wider trend by companies to revive sentiment as the rout in Chinese markets extend. Hong Kong-listed firms are also increasing share buybacks in a bid to lift valuations.
The CSI 300 Index has fallen nearly 12% from a peak in January, while offshore Chinese stocks are among some of the world’s worst performers this year as investors dumped shares over concerns of rising defaults in the property sector and slow recovery in consumption after the pandemic.
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Leading the dividend payout this year are some of China’s biggest state-owned banks, Bloomberg-compiled data show. They are followed by oil producer PetroChina Co. and liquor maker Kweichow Moutai Co.
Firms may further increase their payouts after the country’s securities watchdog recently urged domestic companies to pay good dividends. Those that don’t meet a certain payout ratio will be asked for an explanation, according to a report by the Shanghai Securities Journal on Tuesday.
“In the A-share market, it’s definitely a good move given the long history of low cash dividends in the past,” said Willer Chen, senior research analyst at Forsyth Barr Asia Ltd. “The strict move by the regulators should boost the dividend to some extent in the future, but still, the fundamentals matters more at this moment.”
–With assistance from April Ma.
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