JPMorgan fund manager: record dividends, buy-backs offer respite from Chinese stock market’s slump

A lot more companies are willing to improve shareholder returns, a portfolio manager for JPMorgan Asset Management’s China Income Fund says

Chinese stocks are likely to stay rangebound with volatility persisting at least through the first half of 2024

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The central business district in Beijing. Chinese stocks took another beating in 2023, as a post-Covid-19 economic recovery faltered and the property crisis deepened while Beijing’s stimulus measures fell short of expectations. Photo: Bloomberg

Published: 9:30am, 27 Dec 2023

With the Chinese market mired in a painful slump, companies are mounting their defences with record dividend payouts and share repurchases. That should provide income-seeking investors with some comfort with another bumpy year ahead, JPMorgan Asset Management said.

“We are seeing [that] a lot more companies are willing to improve shareholder returns, and [are] more committed to that,” said Lilian Leung, a portfolio manager for the firm’s China Income Fund in Hong Kong. “This is going to be a structural change going forward, and [will be] sustainable.”

Chinese stocks took another beating this year, as a post-Covid-19 economic recovery faltered and the property crisis deepened while Beijing’s stimulus measures fell short of expectations. The MSCI China Index has lost more than 14 per cent this year, trailing most of its global peers, and its valuation has fallen below its five-year average.

To support their valuations and fend off pessimism from the broader market, the country’s biggest firms are stepping up dividends and buy-backs. Members of the CSI 300 Index generated an average dividend yield of 2.94 per cent this year, the highest on record, according to Bloomberg data.

Meanwhile, their peers listed in Hong Kong have spent a record US$14 billion on repurchasing their own shares, with market heavyweights such as Li Ning, Meituan and Wuxi Biologics unveiling buy-back programmes worth a combined US$2.8 billion this month.

“From the absolute level or valuation perspective, the market has potentially reached the bottom,” Leung said. “When we see some tailwind from an economic recovery, [such corporate actions] will add support to ratings.”