China stock market

Chinese stocks’ 2017 dividend payouts rise to record after regulator pried open their purses

The China Securities Regulatory Commission says the rush of corporate generosity is a result of its efforts to increase payouts in the face of investor complaints

PUBLISHED : Thursday, 24 May, 2018, 3:00pm
UPDATED : Thursday, 24 May, 2018, 3:55pm

Cash dividends proposed by mainland China-listed companies exceeded 1 trillion yuan (US$156.5 billion) for the first time in 2017, in what the market regulator said was a vindication of its efforts to increase payouts in the face of complaints from investors.

The China Securities Regulatory Commission said in a statement on its website that 2,754 companies planned to pay a combined 1.07 trillion yuan in dividends to shareholders, an increase of 22 per cent from the previous year.

“We have been an active proponent of cash dividend payouts in recent years and have been guiding listed companies to pay more attention to returns to investors,” the statement said. “We have been strengthening supervision over those companies that have not issued dividends for a long time to push them to keep increasing payouts.”

Dividends have become an increasingly critical issue at a time when China’s US$7.6 trillion stock market, the world’s second largest, is becoming more accessible to overseas investors. The regulator has been taking complaints from small and foreign investors that Chinese publicly traded companies are not doing enough to pay dividends.

The 234 mainland China-traded stocks are due to be added to MSCI’s global benchmarks on June 1, which will bring in more foreign investors.

China’s listed companies saw ‘generally strong’ profit growth in recent quarter

About 55 per cent of the companies that proposed dividends in their 2017 results have a payout ratio – dividends as a percentage of annual profits – above 30 per cent, the statement said, while 15 of the 35 companies that had not issued dividends in the three years to 2016 would pay them in 2017, with an average payout ratio exceeding 50 per cent, it said.

The regulator also said its drive to clamp down on excessive issue of bonus stocks, a method used by some listed companies to avoid paying cash dividends and help insider selling, had yielded good results. The number of companies announcing a high proportion of bonus share payouts dropped 72 per cent in 2017 from a year earlier, it said.