Rising Dividends Reflect Cultural Change in China’s Stock Market – News and Statistics –

Jan 24, 2025

The Chinese stock market is witnessing a transformative shift as companies, encouraged by Beijing, ramp up share buybacks and distribute record dividends, according to Yahoo Finance. These efforts are designed to boost shareholder returns and instill renewed investor confidence in a market that has seen sluggish growth over the years. Data from the IndexBox platform highlights this emerging trend, pointing to a dramatic cultural change.

Dividend yields on Chinese stocks have ascended to approximately 3%, the highest since 2016, offering a silver lining to investors who have endured the stock market’s stagnation. Chinese firms delivered a record-breaking 2.4 trillion yuan ($329.7 billion) in dividends in 2024, with share buybacks also hitting a peak of 147.6 billion yuan last year.

As a result of these measures, the focus on shareholder return is becoming even more pronounced. Investors are increasingly drawn to dividend-centric exchange-traded funds (ETFs), which have seen substantial inflows of nearly $8 billion since 2020. This shift marks a significant departure from the previous five years, which only reported inflows of $273 million. Moreover, the CSI Dividend Index, consisting of high-yield traditional energy, financial, and material companies, has surged by 20% over the past five years, contrasting sharply with an 8% decline in the CSI300 index.

This deliberate transformation suggests a new ‘sweet spot’ in the market dynamics, where growth and yield coexist. “China was never a dividend-yielding asset class as a whole,” says Nicholas Chui, China portfolio manager at Franklin Templeton. “But now I think we’re in a nice sweet spot where you have both growth and yield.” The dividends are also a strategic move to retain income-focused domestic investors, providing yields higher than the 1.7% from 10-year government bonds.

Looking ahead, analysts, such as those at Goldman Sachs, project that Chinese companies could return around 3.5 trillion yuan to shareholders by 2025, marking a significant 17% increase. This evolving landscape underscores the evolving corporate philosophy in China, which Herald van der Linde from HSBC describes as “a very big shift in mindset.” A decade ago, such a strategic emphasis on returning cash to shareholders might have seemed improbable.

Source: IndexBox Market Intelligence Platform

This article was originally published by a www.indexbox.io . Read the Original article here. .