Goldman Sachs bullish on China shareholder returns

Investing.com
Updated Jun 25, 2024 05:54
Mitrade
coverImg
Source: Shutterstock

Investing.com-- A trend of increased shareholder returns among Chinese companies, particularly through dividends and buybacks, are taking shape in China, Goldman Sachs (NYSE:GS) analysts wrote in a note. 


GS said it was bullish on the theme of shareholder returns in Chinese equities, stating that the trend was a “rewarding strategy” since 2021. GS said listed Chinese companies had returned more than 2 trillion yuan ($280 billion) each year over the past three years.


Outsized dividends and buybacks had kept some brokerages bullish on Chinese markets, even as broader valuations declined substantially as a post-COVID economic rebound in China largely failed to materialize. China’s benchmark Shanghai Shenzhen CSI 300 and Shanghai Composite indexes had slumped to pre-COVID lows earlier in 2024, although they did rebound from the levels. 


GS said it remained bullish on Chinese shareholder returns on the prospect of a strong policy push from Beijing to improve returns, with reforms to Chinese state-owned enterprises (SOEs) reflecting this notion.


Chinese companies also have strong cash balances and cashflows, retaining the ability to keep up shareholder returns despite near-term economic headwinds. 

GS also presented dividend incomes from Chinese firms as a stable income, which are attractive in the face of high global interest rates and increased economic uncertainty. 


Additionally, low participation rates in Chinese markets presented the potential for increased value from more participation by institutional investors. Deleveraging from the property market, following a prolonged downturn in the sector, could also present opportunities for diversification into Chinese equities. 


GS overweight on China TMT, SOEs 


The brokerage reiterated that it was overweight on China’s technology, media, and telecom sector, and was also biased towards “high-quality” SOEs. Its bullish outlook on strong shareholder returns also factored into its stance. 


Major picks by the brokerage include tech giants Tencent Holdings Ltd (HK:0700), JD.com (NASDAQ:JD) (HK:9618) and BYD Co Ltd (HK:1211), financials including Industrial and Commercial Bank of China Ltd (SS:601398) and Bank of China Ltd (SS:601988), along with a range of automakers, consumer staples and utility stocks.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

Do you find this article useful?
Related Articles
placeholder
Wedbush says Palantir stock could nearly double from here. Here's howWedbush analysts issued a bullish outlook for Palantir Technologies Inc . (NYSE:PLTR) in a note Thursday, suggesting the stock could nearly double in value. They cite Palantir's central role in the AI revolution and expanding use cases for its products as key drivers of future growth.
Author  Investing.com
Wedbush analysts issued a bullish outlook for Palantir Technologies Inc . (NYSE:PLTR) in a note Thursday, suggesting the stock could nearly double in value. They cite Palantir's central role in the AI revolution and expanding use cases for its products as key drivers of future growth.
placeholder
Avoid this group of chip stocks as the US election approaches: CitiThe broader U.S. equity market saw a sell-off on Wednesday, dragging the Nasdaq 2.8% and the S&P 500 down 2.8% and 1.4%, respectively.The sell-off was led by a sharp pullback in the semiconductor sect
Author  Investing.com
The broader U.S. equity market saw a sell-off on Wednesday, dragging the Nasdaq 2.8% and the S&P 500 down 2.8% and 1.4%, respectively.The sell-off was led by a sharp pullback in the semiconductor sect
placeholder
DJT stock skyrockets 60% after Trump assassination attemptShares in Trump Media&Technology Group Corp (NASDAQ:DJT) skyrocketed in Monday's premarket trading following a dramatic weekend marked by what authorities are investigating as an assassination attempt on former U.S. President Donald Trump.
Author  Investing.com
Shares in Trump Media&Technology Group Corp (NASDAQ:DJT) skyrocketed in Monday's premarket trading following a dramatic weekend marked by what authorities are investigating as an assassination attempt on former U.S. President Donald Trump.
placeholder
Apple stock rises as Morgan Stanley names it Top Pick ahead of iPhone 16 launchApple (NASDAQ:AAPL) stock edged 2% higher in premarket trading Monday after Morgan Stanley (NYSE:MS) analysts upgraded it to a Top Pick and raised the price target from $216 to $273.
Author  Investing.com
Apple (NASDAQ:AAPL) stock edged 2% higher in premarket trading Monday after Morgan Stanley (NYSE:MS) analysts upgraded it to a Top Pick and raised the price target from $216 to $273.
placeholder
Wells Fargo remains bearish on Tesla stock, sees more than 50% downside riskWells Fargo (NYSE:WFC) analysts said they retain a pessimistic outlook on Tesla (NASDAQ:TSLA) stock, reiterating an Underweight rating and the price target of $120, which implies a possible downside of more than 50% from current levels.
Author  Investing.com
Wells Fargo (NYSE:WFC) analysts said they retain a pessimistic outlook on Tesla (NASDAQ:TSLA) stock, reiterating an Underweight rating and the price target of $120, which implies a possible downside of more than 50% from current levels.