30% dividend eyed as bourse seeks investors
Source: Bloomberg News |
January 9, 2013, Wednesday
|
Print Edition
Print Edition
COMPANIES on the Shanghai Stock Exchange will be urged to pay at least 30 percent of their annual profits to shareholders as the bourse seeks to lure more investors to equities.
Companies that fail to do so will need to disclose the reason in annual reports, the Shanghai exchange has said in a dividend-payment guideline. There was no mention of penalties in the statement.
"This is the first time the Shanghai exchange has issued such a guideline on dividend payments," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees US$285 million. "This makes dividend payments for companies more implementable and is positive for the market."
Guo Shuqing, chairman of China Securities Regulatory Commission, has encouraged dividend payments, tightened rules on delisting companies and cut trading costs to boost the appeal of Asia's third-largest stock market.
"Only the establishment of an efficient and stable dividend-payment mechanism for listed companies can attract long-term institutional investors seeking steady dividend returns and reasonable capital gains," the exchange said in the statement. "That'll make the valuations of the market reasonable and stable."
The average dividend yield of the 994 companies in the Shanghai Composite Index is 2.5 percent, compared with 2.7 for the MSCI Emerging-Markets Index.
The Shanghai index trades at 12.6 times reported earnings, compared with a record low of 10.8 in December, according to daily data compiled by Bloomberg News since 2006.
As of the end of 2011, 347 companies on the Shanghai exchange paid dividends for three consecutive years, accounting for 40 percent of the companies that have gone public for at least three years, the Shanghai exchange said in the statement.
China announced last year it would cut the stock dividend tax by half for individuals who hold shares for at least one year to encourage long-term investment.
Companies that fail to do so will need to disclose the reason in annual reports, the Shanghai exchange has said in a dividend-payment guideline. There was no mention of penalties in the statement.
"This is the first time the Shanghai exchange has issued such a guideline on dividend payments," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees US$285 million. "This makes dividend payments for companies more implementable and is positive for the market."
Guo Shuqing, chairman of China Securities Regulatory Commission, has encouraged dividend payments, tightened rules on delisting companies and cut trading costs to boost the appeal of Asia's third-largest stock market.
"Only the establishment of an efficient and stable dividend-payment mechanism for listed companies can attract long-term institutional investors seeking steady dividend returns and reasonable capital gains," the exchange said in the statement. "That'll make the valuations of the market reasonable and stable."
The average dividend yield of the 994 companies in the Shanghai Composite Index is 2.5 percent, compared with 2.7 for the MSCI Emerging-Markets Index.
The Shanghai index trades at 12.6 times reported earnings, compared with a record low of 10.8 in December, according to daily data compiled by Bloomberg News since 2006.
As of the end of 2011, 347 companies on the Shanghai exchange paid dividends for three consecutive years, accounting for 40 percent of the companies that have gone public for at least three years, the Shanghai exchange said in the statement.
China announced last year it would cut the stock dividend tax by half for individuals who hold shares for at least one year to encourage long-term investment.
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