Unlocking the potential of China’s A-share market


At Value Partners, we believe that the best way to invest in China is through an actively managed total-return approach that favours stable, sustainable, high-quality companies with dependable dividends.

Despite common perceptions, successful investing in China has not been just about harnessing growth; historically, dividend-paying stocks have outperformed. But we believe that conditions are becoming even more favourable for dividend-focused investors, with supportive long-term structural trends in place on both the supply and demand sides.

  • As China’s growth normalises and its population ages, we expect deflationary pressures to lead to a sustained period of low interest rates, creating a positive environment for income-paying equity investments.
  • At the same time, a great asset reallocation is underway as China’s population diversifies exposure away from the property market to other investment opportunities and as an older population seeks alternative sources of income. The development of China’s private pensions industry and new regulations in the insurance industry should also create robust and sustainable demand for dividend stocks.
  • Meanwhile, the Chinese government is taking action to improve returns on equity, payout ratios and overall shareholder returns from state-sector companies. More broadly, companies listed on the main boards of the Shanghai and Shenzhen stock exchanges are now required to meet minimum payout ratios. These reforms bode well for income returns from the equity market.

Collectively, these structural trends should provide strong support for dividend-driven investing in China now and in the decades ahead.

We set out the case for the dividend-focused approach in the latest whitepaper. We hope this will help investors reappraise why they invest in China and how they can best extract alpha from the country’s equity markets.

Read the full white paper here >>
The views expressed are the views of Value Partners Hong Kong Limited only and are subject to change based on market and other conditions. The information provided does not constitute investment advice and it should not be relied on as such. All materials have been obtained from sources believed to be reliable as of the date of presentation, but their accuracy is not guaranteed. This material contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.Investors should note that investment involves risk. The price of units may go down as well as up and past performance is not indicative of future results. Investors should read the explanatory memorandum for details and risk factors in particular those associated with investment in emerging markets. Investors should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you.This article has not been reviewed by the Securities and Futures Commission of Hong Kong. Issuer: Value Partners Hong Kong Limited.