Business
Chinese Banks Shine Amid Market Turmoil: Pursuit of Dividend Yields Leads to 19% Average Gain
Amidst market chaos, Chinese banks thrive as stock investors pursue dividend yields. With ICBC, CCB, ABC, and BOC at the helm, 42 banks listed on the mainland have seen an average increase of 19 per cent this year, significantly outperforming the standard stock index.
The 42 banks listed on the mainland have seen an average increase of 19 per cent since the beginning of 2024, as per the financial data from Shanghai DZH. This significant rise starkly contrasts with the 4.2 per cent drop in the standard CSI 300 Index during the same timeframe.
The major four government-owned banks have been at the forefront of this impressive performance. The Industrial and Commercial Bank of China (ICBC), which is the largest of the group, and the China Construction Bank (CCB) have both reached heights not seen since 2018. Meanwhile, the Agricultural Bank of China (ABC) has achieved an all-time high, and the Bank of China's share price is at its maximum since 2015.
Banks are usually viewed as a reflection of the economy, however, their superior performance is currently being propelled by steady dividend returns amidst a scarcity of assets. The uneven economic revival in China has led investors to aggressively invest in bonds, lowering the yield on the 10-year government bond to an all-time low of 2.124% this month. This is only half of the average dividend disbursement of the four major banks.
"Large banks, including the big four, offer quite appealing dividend yields," stated Lin Rongxiong, a market analyst from SDIC Securities. "To illustrate, the big four banks average dividend yields are roughly 5 per cent, and the difference between these and the yield on a 10-year government bond is currently at a record high."
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