Chinese firms’ dividend payments rose significantly over past decade, blue-chips’ 2021 dividend payouts to exceed 1 trillion for first time, a study shows
Chinese firms’ dividend payments rose significantly over past decade, blue-chips’ 2021 dividend payouts to exceed 1 trillion for first time, a study shows

Chinese firms’ dividend payments rose significantly over past decade, blue-chips’ 2021 dividend payouts to exceed 1 trillion for first time, a study shows

 

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Dividend payments by Chinese companies have increased significantly over the past decade and mainland-listed blue-chip companies’ dividend payouts are set to surpass 1 trillion yuan mark for 2021 for the first time ever, shows a new study by S&P Global Market Intelligence.

The total dividend payouts by Chinas’s blue-chip companies included the CSI 300, which tracks the largest stocks in Shenzhen and Shanghai, is set to surpass 1 trillion yuan ($157.2 billion) for financial year 2021 for the first time ever, compared to about 395.1 billion yuan in 2012, according to the report.

Chinese companies listed across all exchanges in the mainland paid a record 1.67 trillion yuan in dividends to shareholders in 2021, rising by 17% from 2020, according to separate data from the China Securities Regulatory Commission.

The CSI 300 fell 2.7% in 2021 as large companies were hit by investor concerns on excessively high valuation, regulatory uncertainty and a slowing economy.

Chinese companies have in recent years been increasingly sharing a greater proportion of their profits with shareholders following encouragement from Beijing, as the country strives to get more of its stocks included into global indices such as the MSCI, which are tracked by investors.

The average dividend payout ratio – total dividend paid to shareholders divided by profit – jumped to nearly 30% in China in 2021 from 15.5% in 2012, the report showed.

Banking, real estate, utilities, cars, insurance, and construction and materials were among the high-yield sectors, with banks showing a stable payout ratio at around 30%.

A separate report by the National Business Daily showed that Bank of Communications had the highest dividend yield among its peers listed in Shenzhen and Shanghai. The bank’s 0.355 yuan dividend per share gave it a dividend yield of 7.64%. It was followed by Bank of China at 6.99%, Agricultural Bank of China at 6.64% and Chongqing Rural Commercial Bank at 6.2%.

However, banks’ wealth management products have underperformed the dividend payouts by the banks themselves. The wealth products had an average return of 3.55 per cent in 2021, 34 basis points lower from a year earlier, according to data from China Banking Wealth Management Registration System.

The wealth products’ underwhelming returns triggered heated discussions among investors and in the press after Chinese bank executives said that stock traders should give the banking sector more consideration.

“The risk level of stocks and wealth management products are different,” said Li, noting higher volatility of stocks. “Bank stocks cannot replace wealth management products.”

He added that the stock market was likely to see net capital outflows due to lingering negative factors such as the ongoing US-China tensions and uncertainties arising from Russia’s invasion of Ukraine.