Shares of Bank of China hit a six-month high in Hong Kong yesterday as Beijing's decision to cut cash dividend payouts shored up investors' confidence in the mainland lender.
The mainland's fourth-largest bank by market value rose as much as 1.77 per cent to HK$3.45 in the morning session before closing at HK$3.39 at the end of the day, unchanged from Friday.
Although stocks fell off in the afternoon, mainland banks are widely expected to trigger a buying rush amid the regulator's ongoing loosening of capital requirements and easing of monetary policies.
Central Huijin Investment, the controlling shareholder of the country's so-called Big Four banks, last week said dividend payouts ratios for last year would be cut by five percentage points to 35 per cent at Industrial and Commercial Bank of China, Bank of China and China Construction Bank. Agricultural Bank of China's ratio would be kept at 35 per cent.
Huijin's move could save the four lenders 32 billion yuan (HK$39.3 billion), a sign that Beijing intends to step back from the protective stance it took on banks in the past two years.
'It is unlikely the regulators will further tighten capital requirements,' said Orient Securities analyst Jin Lin. 'Banking stocks are good buys this year since they could expand business faster as the regulators loosen the reins.'