smartcybers786@gmail.com 
An investor looks at his mobile phone in front of a board showing stock information at a brokerage office in Beijing, China January 2, 2020. — Reuters
#Dividend #surge #signals #culture #shift #Chinas #markets
HONG KONG/SINGAPORE: As China’s companies, in new shades of capitalism, are emerging on the stock market, buying back their shares and buying back their shares and many a nasty rebound, at the behest of Beijing. Pay record dividends to investors waiting for
Investors say the record offering of share buybacks and dividend payouts signals a cultural shift in the market, putting a spotlight on shareholders that parallels the corporate governance shift underway in Japan.
The dividend yield on Chinese stocks rose to 3.0 percent, the highest since 2016, benefiting those who have bravely invested in a market that has limped for years and Donald Trump’s U.S. presidency. He faces more stress after returning as
“China’s regulators and policymakers are trying to engineer this culture of shareholder returns,” said Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas.
“If this can be successfully engineered, it will change the makeup of the capital market, and you’ve seen the early signs of that,” referring to increased shareholder returns.
Buybacks and dividends were introduced in September as part of proposals by Chinese authorities to boost stock prices and boost consumer sentiment.
The benchmark CSI 300 index has struggled in recent years, up more than 27 percent since 2021 compared to a 65 percent gain for the S&P 500. The market value of Chinese stocks is about $11 trillion for a decade.
Concerns about the leveraged property sector, deflationary pressures, lack of major stimulus and geopolitical tensions have hurt sentiment, leading to foreign investment outflows. The threat of tariffs from Trump is another worry.
Even after Beijing signaled its willingness to stimulate the market in September, stock prices have lost momentum. The CSI300 index rose 40 percent in the two weeks after the first stimulus announcements but has since been disappointed by the degree and pace of its implementation.
“The simple way of looking at it is, you should pay enough dividends … you should bear the pain of the fact that the recovery may not be priced in,” said Bhaskar Laxminarayan, chief investment officer for Asia at Julius. Beer
“You are being paid for that patience. If you’re not, then it’s not worth it. “
Big data
Chinese firms distributed a record 2.4 trillion yuan ($329.7 billion) in gross profit in 2024, data from regulators showed.
More than 310 companies are expected to pay more than 340 billion yuan in dividends in December and January, Wu Qing, head of the China Securities Regulatory Commission, said on Thursday.
This is a 9-fold increase in the number of companies and a 7.6-fold increase in profits compared to the same period last year.
In a sign of how the market is maturing where shareholder returns are becoming a differentiator, investors are steadily pouring into profitable themed exchange-traded funds (ETFs), including After 2020 there is an inflow of about $8 billion, compared to only $3,273 million. Over the past five years, LSEG Leaper data showed.
The CSI Dividend Index—composed of traditional energy, financial and materials companies that earn high dividends—is up 20 percent over the past five years, compared with a decline of about 8.0 percent for the blue-chip CSI300 index.
The CSI Growth Index plunged 25 percent in the same period.
Cultural change
Policy measures, including a 300 billion yuan share buyback financing program and guidelines requiring mainland companies to improve shareholder returns and valuations, have helped focus on high-yielding firms.
“China has never been a profitable asset class overall, because it’s always been seen as a growth-oriented play. But now I think we’re in a nice sweet spot where you have both growth and yield. .
About two-thirds of the shares in CHUI’s portfolio are yielding at least 2.0 percent, which is “not just a deliberate allocation on my part, but really increased the yield of the entire market,” Choi said. “It’s a change in culture.”
Rising yields also prevent income-seeking mainland investors from moving into bonds, as they have done for months. The yield is now higher than the 1.7 percent they can earn on 10-year government bonds.
Shares of battery maker Contemporary Amperex Technology and e-commerce rallied after the companies announced buybacks or dividend payouts.
Goldman Sachs estimates that Chinese companies listed at home and abroad could return a total of 3.5 trillion yuan to shareholders in 2025, a jump of more than 17 percent.
“Companies don’t know where to put their cash, so they return it to shareholders now. It’s a huge shift in mindset.
