Chinese firms’ third-quarter dividend growth lags global average amid market slump
Chinese listed firms’ third-quarter dividend payments lag behind the global average, according to a report by Capital Group, throwing doubt over the effectiveness of Beijing’s ongoing stock market stabilisation plans. In China, dividends only rose 5.3 per cent on a core basis in the third-quarter, compared with global growth of 7.5 per cent, according to the Dividend Watch report released by…
A recent report from Capital Group highlights that Chinese listed firms' third-quarter dividend payments fell short of the global average, casting uncertainty on Beijing's ongoing stock market stabilization efforts. According to the Dividend Watch report released by Capital Group, Chinese dividends grew by 5.3% on a core basis, whereas the global growth stood at 7.5%.
While 88% of companies in the Capital Group index increased or maintained their dividends globally, this figure dropped to 66% in China. The report arrives as China's stock market faced its worst month in a decade, with the CSI 300 index declining by 8.5%, leading to an overall annual loss exceeding 13%. Contributing factors to this downturn include sluggish consumption levels and the ongoing property debt crisis in China.
In response, Beijing announced plans on Monday to boost liquidity, lower rates for share buy-back loans, and ease restrictions on leveraged trading. The financial, chemicals, and mining sectors played a significant role in China's dividend growth, though the market remains vulnerable to property and export weaknesses.
The report notes that Chinese dividend growth remains inconsistent, with payouts tied closely to earnings performance and formal payout policies, leading to more variation between companies and sectors. In contrast, the US experienced a core growth of 5.8%, with 96% of US companies either raising or holding their dividends, indicating sustained earnings growth across diverse industries.
Asia-Pacific, excluding China, Hong Kong, and Japan, recorded the second-highest regional core growth at 13.3%, with Taiwan achieving a new third-quarter record. Hong Kong outperformed the regional average, posting a core growth of 6.9%, resulting in a combined core dividend growth of 5.5% when combined with mainland China.
Despite the risks, including elevated energy costs, trade tensions, and divergent monetary policy, Alexandra Haggard, Capital Group's head of product for Europe and Asia-Pacific, maintains that the underlying backdrop remains robust. Globally, dividends reached a third-quarter record of US$546 billion, with Capital Group projecting a total of US$2.24 trillion for the year.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
