‘Bet on Chinese state-owned conglomerates’, says Boston Consulting Group
Firm found state-run entities’ total shareholder returns over a 10-year period beat their western and Japanese counterparts
Boston Consulting Group, one of the world’s top business advisory and consulting groups, is tipping state-owned multi-business conglomerates as solid, future long-term bets.
Based on a study of 380 listed Chinese conglomerates, or their listed subsidiaries, the firm found state-owned conglomerates’ total shareholder returns (TSR) over a ten-year period (2006-15) actually beat their western and Japanese counterparts.
TSR combines share price appreciation and dividends paid to show the total return to shareholders expressed as an annualised percentage.
BCG measured relative TSR, that divides benchmark returns, to measure how stocks outperform or underperform the overall market.
The result is that Chinese conglomerates’ relative TSR registered a median 3.4 per cent, beating the US’s 0.6, the UK’s 3, and Japan’s -1.7 per cent, which BCG attributed to China’s overall strong economic growth and corporate revenue expansion in the past decade.
BCG then examined how performance varies across different ownership. And contrary to public perception, state-owned conglomerates generally outperformed private ones, it said.