BlackRock, Vanguard funds see China’s most generous dividend payers as the juiciest stock picks amid muddled market outlook
- Shanghai Stock Exchange Dividend Index has outpaced the market by three to one in generating returns for investors
- Wuxi Commercial Mansion, Yanzhou Coal, among the biggest index members, have rallied by 48 to 82 per cent this year
The Shanghai Stock Exchange Dividend Index, which tracks 50 of its top-paying companies, has handed investors 12.6 per cent return this year versus the benchmark index’s 3.8 per cent. That makes it among the best fund strategies for onshore stocks so far this year.
The winning run underscores prevailing caution on the world’s second largest market as the days of easy money end and stock picking in a rangebound pattern becomes hazardous. Major onshore investment banks are divided on the second half outlook amid concerns about earnings slowdown, dwindling liquidity and faster inflation.
“We recommend allocations into high-dividend stocks on the lack of capital flows and risk appetite in the short term,” said Tang Jun, an analyst at Zhongtai Securities. “There will be no clear-cut opportunity in the market for now while trading will be light.”