China’s dip hits global dividends
Payouts to shareholders from Chinese companies are set to decline for the first time on record this year as firms feel the bite of the country’s slowdown in growth, a City investor has warned today.
Chinese dividends were down 2.1 per cent year-on-year in the three months to September and this trend is set to continue for the rest of 2015, according to Henderson Global Investors.
The three months to September were also marred by weak, or no growth, in the payouts from China’s major banks.
“China is now the tenth largest dividend payer in the world, so the slowdown matters,” said Alex Crooke, head of global equity at Henderson Global Investors.
China is not the only developing country undergoing a slowdown at the moment, and with many countries seeing slow growth and their currency falling in value against the dollar, total global dividends in dollars are set to decline two per cent this year compared with 2014.
Global payouts to shareholders are expected to hit $1.15 trillion (£755bn) this year.
Henderson said the dip in dividends caused by China was partially offset by the “astonishing pace” at which dividends in the US were climbing – overall payouts there rose 23.4 per cent year-on-year in the three months to September.
The trends in dividends are reflecting global economic developments with the US economy continuing to grow strongly.
“The US is far ahead of the curve, propelling dividends forward at breakneck speed,” said Crooke.
Meanwhile, the economic slowdown in China was having a more abrupt impact than anticipated.
“The slowdown in Chinese dividends has come sooner than we expected. Payouts from Chinese companies have nearly tripled in six years, but a fall in the country’s total payout is likely in 2015 for the first time.”