Authors Jiaxing Li and Ankur Bernerjee
Hong Kong/Singapore (Reuters) – New shades of capitalism appear in the Chinese Stolen Market of Shares, because at the beam of Beijing, they buy their shares and pay record dividends to investors who are waiting for a successful recovery so far.
Investors say a record increase in shares and dividend payments indicates a cultural shift on the market, drawing attention to shareholders’ return to the current transformation of corporate management in Japan.
The dividend yield to the Chinese shares has increased to about 3%, which has been the most since 2016, rewarding investors who have boldly remained investing in the market that has been limp for years and faced more stress after the return of Donald Trump to the post of President of the United States.
“Chinese regulators and policy creators are trying to devise this culture of shareholders,” said Jason Lui, head of the Asian-Pacific strategy of shares and derivatives at BNP Paribas (OTC :).
“If this can be successfully done, it will change the composition of the capital market, and you have seen some wound signs of it,” thinking of increased shareholders’ return.
Businesses and dividends were introduced as part of the proposal of Chinese authorities in September to raise shares’ prices and strengthen the consumer mood.
The CSI 300 reference index has had problems in recent years, fell by more than 27% of 2021. Compared to a growth of 65% for. The market value of Chinese shares has been stagnant for about $ 11 trillion for a decade.
Long -term concerns about the rented real estate sector, deflation pressures, lack of great incentives and geopolitical tensions have harmed the mood, causing an exodus of foreign investment. Trump’s threat to customs duties is another concern.
Even after Beijing showed a willingness to stimulate the market in September, the shares’ prices lost their momentum. The index increased 40% in two weeks after the first stimulus announcements, but due to the disappointment of the degree and pace of implementation, the profits had since halved.
“Simply speaking, you should get a sufficient dividend … to be able to bear the pain because of the fact that recovery may not happen in estimates,” said Bhaskar Laxminarayan, Chief Investment Director for Asia in Asia Julius Baer (SIX:).
“You are paid for that patience. If you are not, then it is not worth it.”
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Chinese companies divided dividends in the total amount of a record 2.4 trillion Juan ($ 329.7 billion) in 2024. The share redemption also increased to a record 147.6 billion yuan last year, the regulator data show.
Wu Qing, leader of the Chinese Regulatory Commission for Securities, said on Thursday that more than 310 companies are expected to pay dividends in a total of more than 340 billion Juan in December and January.
This is 9 times the number of companies and 7.6 times the amount of dividends compared to the same period last year.
In the sign that the market matures into the market where shareholder refund becomes the main difference, investors are constantly poured into the funds that are traded on the stock exchange) with the topic of dividendi, with an inflow of nearly 8 billion USD from 2020, compared to only 273 million USD in the previous five years, LSEG Lipper data showed.
Dividendi CSI dividend index – consisting of traditional energy, financial and material companies that bring high dividends – has increased by 20% in the last five years compared to a decline of about 8% for the CSI300 index with the worst chips.
The CSI growth index sank 25%in the same period.
Cultural shift
Political measures, including a 300 billion Juan shares, and the guidelines that require the land from the mainland to improve shareholder and value assessment, have helped focusing focus on companies with higher yields.
“China as a whole has never been a class of assets that brings dividends, because it has always been viewed as a game aimed at growth. But now I think we are in a beautiful place where you have growth and yield,” said Nicholas Chui, a manager portfolio in China in Franklin Templeton.
About two -thirds of the shares in Chui’s portfolio now have a yield of at least 2%, which “is not just a deliberate distribution on my part, but the whole whole market has grown in yield,” said Chui. – It’s a change in culture.
Growing dividends also prevent investors from the mainland, eager for income to rush into bonds, as they have done for months. The dividend yield is now significantly above 1.7% that can earn on 10-year-old state bonds.
Battery manufacturer’s shares Contemporary AMPEREX Technology and Greats of E-Landscreen Tencenta have increased after companies have announced the purchase or payment of dividends.
Goldman Sachs estimates that Chinese companies listed in the country and abroad could return a total of 3.5 trillion Juan 2025 to shareholders, which is a jump of over 17%.
“The companies do not know where to put their cash, so now they are returning it to shareholders. This is a very big change in thinking mode,” said Herald van der Linde (NYSE :), head of the capital strategy for Asia and the Pacific at HSBC. .
“I don’t think 10 years ago you wouldn’t expect this.”
(1 USD = 7,2798)
