The Chinese national flag fluttered in the background of the financial district of Lujiazui.
VCG Visual China Group Getty Images
Chinese companies encourage investors with record dividend payments and purchases of shares as part of the rigorous reform of corporate order, and some market observers say more on the horizon.
Last year, Chinese stock market companies paid a record 2.4 trillion yuan ($ 328 billion) in dividends, in accordance with Data from China Securities regulators Commission (CSRC). In addition, companies bought shares worth 147.6 billion yuan-one level in history.
Goldman Sachs estimates that the distribution of cash Chinese companies can reach $ 3.5 trillion this year to achieve new Maksima, wrote the strategist of the Bank China Capital Kinger Lau in a note published at the beginning of February.
Herald van der Linde, HSBC asia equity strategist, repeated similar sentiments when the prospects of the following year were asked.
“I think they will continue. Companies don't know where to put cash. They don't get much from the bank, so they return it to shareholders. This is a very big change in the way of thinking, “he said.
It is expected that in December 2024 in December 2024, over 310 companies donated dividends exceeding 340 billion yuan and alone in January, marking a nine-fold jump in the number of dividend paying companies and a 7.6-fold increase in total payment compared to the same period in the same period last year, CSRC added in a statement.
Dividends on Chinese wrestling also increased to about 3%, the highest level in almost a decade, showed the data of Goldman Sachs.
Chinese high dividend in profitability they exceeded them in Emerging markets of Asia by about 15%, according to the index data.
Priority for the government
The Chinese government actively promotes companies to pay higher shareholders' profits by providing them with tax incentives.
Improving the return of shareholders became a priority for the Council of State and CSRC in 2024. In October last year, the Chinese Central Bank launched 300 billion yuan Targeted Relinging program to help listed companies and main shareholders to buy back shares. In April 2024, the regulatory authorities also strengthened the standards of shares, decreased under the illegal sales of shares and strengthened the regulation of dividend payments.
In August last year, 677 listed companies reported cash dividend plans, compared to 500 from the same last year in 2023, Data from China Association for Public Companies showed.
This is very powered by Beijing to improve corporate performance. When Beijing says jump, soe say, “How high?”
Jason HSU
Rayliant Global Advisors
State -owned enterprises. especially. To have He was at the forefront For this reason, Allianz Global Investors from this increase in dividend payment and purchase of shares. Some significant companies are petrochina, z The dividend performance is about 8%I CNOOC Group with a capacity of 7.54%.
“This is very powered by Beijing to improve corporate performance. When Beijing says jump, soe say, “How high? ” – said Jason Hsu, founder and chairman of Rayliant Global Advisors, adding that the Chinese government provides Chinese government of Chinese companies with favorable loan rates to finance dividend strengthening.
Private companies also increase their cash payments. For example, an e-commerce giant jd.com approved the purchase of $ 5 billion in three years in SeptemberIn addition to its efficiency, 1.9% of dividend.
Especially in the case of companies with large capitalization, investors can count on more record dividend payments, especially with Bee Behemoths, HSU said CNBC.
However, the dividend payment indicator in China, which measures dividends transferred to shareholders in relation to the company's net income, is still behind some Asian counterparts.
The dividend payment rate in China was 52.58% at the end of January, According to data developed by Reuters and LSEG. While Japan 36.12% and 27.6% of South Korea still lag behind 89.2% of Australia and 78.13% in Singapore.
Attracting residents back to stock market markets
Government pursuit of highly divisional payments increases Chinese shares in a short period of time, attracting long -term investors from domestic and foreign markets, said Le Xia, the main economist of Asia at BBVA Research.
However, this may mean more cash payments flowing from China to sea markets, which can exert pressure on Chinese yuan, Xia said CNBC.
Higher payments of dividends are good for placing local investors in a short period of time, because in fact “there is no other place where the Chinese keep money” except gold, andS Shaun Rein, managing director of the China China Research Group, real estate market and shares in the country.
Moods around the Chinese economy and markets He was poor in recent years. Some initial growth In this country, CSI 300, caused by Blitz government funds introduced in September, delivered.
“A simple way to look at this, you should receive enough dividends or other widespread activities so that you feel the pain of the fact that revival may not occur in valuations,” said the investment director of Julius Baer in Asia, Bhasar Laxminarayan.
He said investors were receiving remuneration for patience. “If not, it's not worth it.”
Dividends get cash in the hands of households, and attractive crops will attract investors back on the stock exchange-especially those who are looking for alternatives to low-performance bank deposits, said HSU Rayliant Global Advisors.
“Receiving a very highly divisional performance, waiting for the (a) catalyst, is a pretty good trade,” said HSU.