Dividend growth to slow at Hong Kong-listed firms, report says

PUBLISHED : Tuesday, 07 January, 2014, 2:42pm
UPDATED : Wednesday, 08 January, 2014, 12:16pm

Dividends at Hong Kong-listed companies are expected to grow a little more slowly for fiscal 2013, levelling off from the sharp increases in the previous two years, a report from research firm Markit said.

The report cited a slower rate of economic growth in China and constant speculation over the US Federal Reserve’s changes in monetary policy.

The overall payout for 2013 at companies listed on the Hang Seng Composite Index (HSCI) is expected to grow 8.3 per cent to HK$665.38 billion, edging down from last year’s 8.9 per cent increase, the report said.

The HSCI covers 95 per cent of the market capitalisation of companies listed on the city’s main board.

A total of 15 out of the 19 sectors in the HSCI are expected to increase payouts, led by carmakers, the report, made available exclusively to the South China Morning Post, said.

Banks will remain the biggest payers of dividends this year, with a 9.2 per cent increase, although that falls short of the double-digit growth in the previous two years, owing in no small part to the effects of policy tightening in China, the report said.

Meanwhile, Markit expects a 20 per cent decline in payouts in the basic resources sector, as no earnings recovery is in sight in the short term.

China Construction Bank, HSBC, China Mobile, Industrial & Commercial Bank of China and CNOOC are predicted to be the top five biggest dividend payers.

Among them, CNOOC is expected to have the sharpest increase in dividends, adding 23.6 per cent year on year, mainly because of a lower base last year.

The dividend payout ratio at China Mobile, on the other hand, is expected to stay almost unchanged from last year at 42.9 per cent, in the face of increasing competition in the mobile industry and the need to make capital investments to support its 4G initiatives, the report said.

CCB and ICBC are expected to raise dividends on the back of higher earnings, and HSBC is expected to increase its dividend payout by 15.4 per cent to HK$80 billion, representing a payout ratio of 60.6 per cent, Markit said.

The biggest surprise, the report said, will come from Brilliance China Automotive, Sinopec Engineering, Sinopec Shanghai Petrochemical and Wuzhou International, which are expected to start paying dividends as earnings improve.

Meanwhile, Yanzhou Coal Mining is expected to suspend its dividend this year, as earnings for 2013 are expected to have fallen 90 per cent, Markit said.