Asia dividend growth falls: Report

Asset Class in Focus

In Q3, global dividends set a record 5.1% growth, but Asia-Pacific ex-Japan dropped 8.8% — and corresponding funds followed.

Asia-Pacific ex-Japan had the lowest dividend growth globally, down 8.8% in Q3, according to the November Janus Henderson Global Dividend Index report. The decline was attributed to lower special dividends in Hong Kong and slumping growth in Australia.

By comparison, global dividend growth was up 5.1% year-on-year to $354bn, setting a Q3 record.

By a different measure – underlying dividend growth – Asia Pacific ex-Japan was up 6.8% year-on-year, but it was still the lowest growth rate among the major regions.

Janus Henderson defines underlying growth as the number that emerges after excluding “the volatility caused by exchange rates, one-off special dividends, changes in the list of companies in our index, and the impact of companies changing their dividend calendar”.

The firm believes underlying growth is a more accurate picture of dividend payout growth.

Q3 annual dividend growth

 Region Headline growth  Underlying growth 
Emerging markets16.4%15.7%
Europe ex-UK10.4%9.1%
North America8.8%7.6%
Asia-Pacific ex-Japan-8.8%6.8%
Source: Janus Henderson Global Dividend Index report. Dividend payout growth vs Q3 2017

The bulk of 2018 dividends have already been paid and the firm therefore forecast full year headline growth to remain unchanged at 8.5%.

The predicted total annual dividend payout in dollars is $1.36trn.

Dividend funds down

A sampling of Asia-Pacific ex-Japan dividend funds authorised for sale in Hong Kong shows that all were negative for the quarter, though nearly all beat the broader equity index, the MSCI Asia ex-Japan.

Each of the featured funds has Taiwan Semiconductor in the top ten holdings and most of the funds also hold Samsung, Ping An and China Construction Bank.

The report ranked China Construction Bank as the biggest dividend payer globally in Q3 and TSMC as second.

The Value Partners fund was down more than others, likely due to large exposure to China equities. Roughly 60% of the portfolio is in shares of Hong Kong and China companies, according to the factsheet.

China equities have been under pressure most of 2018 due to trade war rhetoric and concerns over slowing GDP growth. The category fell the steepest of all asset classes in October.

However, China headline dividend growth in Q3, year-on-year, was up 14.2%

“Chinese dividends returned to growth, after three years of contraction,” the report said.

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