HONG KONG/SHANGHAI: In this era of pandemic uncertainty, Chinese and Hong Kong-listed firms have come to one consensus on how to best survive it: sit on their wallets and preserve cash. They are retaining profits instead of distributing them to shareholders, with the most Hong Kong dividend payers in at least 35 years opting not to do so in the first quarter.
HONG KONG/SHANGHAI: In this era of pandemic uncertainty, Chinese and Hong Kong-listed firms have come to one consensus on how to best survive it: sit on their wallets and preserve cash.
Beijing has resorted to a long list of measures to counter the fallout from the coronavirus, but so far has shown little appetite for stimulus on the scale unveiled in the US or Japan even as profits slump and debt repayment pressures build. Stocks have priced in the lost business from the pandemic, and Chen said buybacks and dividends would likely do little to help share prices in this environment.
Meanwhile, as of Monday morning 109 Chinese-listed firms had said in April they’re skipping a dividend payment. That’s the highest monthly total in a year.Stock repurchases tend to signal management optimism about a company’s shares, and prior buyback jumps since 2008 in Hong Kong corresponded with bottoms for the Hang Seng Index. But there’s been no repurchase spike yet.
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