China's largest companies will reach a record US$174 billion

As per a S&P Global Market Intelligence study published on Wednesday, dividend payments by the major Chinese companies last year hit a new record of 1.2 trillion yuan (US$174.43 billion).

Analysts hope the high payouts will continue this year as a result of government policies.

According to the report, the net payout by companies in the CSI 300, which monitors the major 300 in Shenzhen and Shanghai, grew 14% last year.

In accord with senior research analyst Ruiying Zhao, who wrote the report, China has been the largest market for dividend distribution in the Asia-Pacific region since 2015 and is anticipated to remain at the top position this year thanks to government policies motivating firms to pay dividends.

“Banks, food and beverage and energy sectors will significantly contribute to the anticipated upsurge in aggregate dividends for the CSI 300 Index,” Zhao said.

“Conversely, due to a lacklustre demand and supply in the preceding year, the real estate and financial sectors are forecast to curtail dividend disbursements.”

In recent years, Chinese firms have been sharing a bigger portion of their profits with stockholders after incitement from Beijing, as the country attempts to get more of its stocks included in global indices like the MSCI, which investors monitor.

The heavy dividend payout seems inconsistent with the performance of CSI 300, which shrank by 21.5 percent last year since the country’s economy shattered due to the pandemic. China only began to relieve its COVID-19 measures in November, before a full reopening earlier this year.

“Share price performance has no direct relationship with dividends,” said Robert Lee Wai-wang, a lawmaker for the financial services sector and local brokerage Grand Capital Holdings’ CEO.

“Companies that report decent profits would like to pay higher dividends to attract investors to buy their stocks. As long as they can afford to pay, they tend to increase rather than cut their dividends.”

Lee looks forward to firms in Hong Kong and mainland China enjoying more robust growth in the second half of this year as they profit from the reopening of the international borders and, therefore, maintaining steady payout dividends in 2023.

As per a distinct report by London-headquarter investment firm Janus Henderson last month, Asia-Pacific firms leaving Japan paid a net of US$184.9 billion in dividends last year, 7.2 percent higher than the previous year.

In accordance with the report, the 1,200 businesses monitored by the organization’s dividend index paid a record US $1.56 trillion, a rise of 8.4% over 2021.

Taiwanese companies guided, with a 67% lift in dividend payments to US $36.9 billion for 2023.

The dividends paid out by Hong-Kong listed companies’ dividends increased by 19.8% in 2022 to US $55.1 billion, with Chinese oil group CNOOC and China Mobile making the biggest contribution to that growth.

Due to the plight faced by many mainland developers, real estate firms listed in Hong Kong paid dividends that averaged 13%.

“Dividends in the Asia-Pacific ex Japan region witnessed a sharp upturn in 2022 despite the global headwinds and subdued economic activity in China following the zero-Covid policy,”  co-portfolio manager for Asian dividend income at Janus Henderson, Sat Duhra, said.

“This provides a real boost to confidence for the 2023 outlook.”

Nevertheless, given the bleak global economic prognosis, inflation, rate increases, and geopolitical threats, Janus Henderson forecasts a 2.3 percent increase in global dividend payouts this year to US$1.60 trillion.

- Published By Team Hongkong Journalist

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