Call for listed firms to pay dividends

An adviser to the mainland's central bank has urged regulators to require listed companies to pay cash dividends, saying it must be a priority if Beijing is to improve its ailing stock market.

Prominent economics professor Li Daokui, a member of the central bank's monetary policy committee, told a financial forum in Beijing that the absence of a dividend policy was a major corporate governance problem, China National Radio reported.

'Public companies have raised funds and spent them on investment without paying a return to the investors,' Li said. 'A rule to force them to distribute enough cash dividends should be published.'

The adviser's remarks followed similar comments by Chongqing mayor Huang Qifan this month, a fresh sign that regulators may try to step in to restore investor confidence in the bearish market.

Retail investors have suffered severe losses as the mainland's benchmark stock index has fallen back to the level of 10 years ago, even though the country's economy has been on a fast track for the past decade.

Two-thirds of mainland investors who responded to a Sina survey said they lost more than 20 per cent of their equity investments this year.

The finding just adds to investor anger towards the mainland regulators because fast-tracked initial public offering approvals had diluted existing holdings.