· How to speed up the implementation of the new "National Nine Articles" ·
Editor's note: Since the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" in April 2024, the capital market has started a deeper reform, and the "1+N" policy system is also accelerating its implementation. Wu Qing, chairman of the China Securities Regulatory Commission, said: "A strong capital market is the standard of the modern economy. "In this issue, the capital market conducted an in-depth analysis on the strict access to issuance and listing, the acceleration of the delisting process, and the changes in cash dividends, and discussed the reform of the stock issuance registration system and the reform of the independent director system. Experts said that in the next two years, a considerable number of companies will choose to withdraw due to strong supervision, and subsequent IPOs can grasp the rhythm under strict supervision.
■Zhang Wei
A-share listed companies ushered in the first dividend season after the release of the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market" (hereinafter referred to as the "New 'National Nine Articles'"). Statistics released by the China Association of Listed Companies show that up to now, 3,859 listed companies have announced or implemented cash dividend plans for 2023, accounting for 92% of all profitable companies, and more than 100 companies have paid cash dividends for the first time since their listings. In terms of amount, the total cash dividend reached 2.24 trillion yuan, a slight increase over the previous year.
Improving the normalized dividend mechanism of listed companies and improving the level of investor returns is an important measure to consolidate the foundation for the development of the capital market. In December 2023, the China Securities Regulatory Commission (CSRC) issued the Guidelines for the Supervision of Listed Companies No. 3 - Cash Dividends of Listed Companies (hereinafter referred to as the "Cash Dividend Guidelines") and the Decision on Amending the Guidelines for the Articles of Association of Listed Companies. There are three main aspects of the revision of the "Cash Dividend Guidelines": first, to further clarify the encouragement of cash dividend orientation and promote the improvement of dividend levels; the second is to simplify the interim dividend procedure and promote the further optimization of the dividend method and rhythm; The third is to strengthen the constraints on enterprises with abnormally high proportion of dividends and guide reasonable dividends.
The new "National Nine Articles" clearly require that the supervision of cash dividends of listed companies be strengthened. For companies that have not paid dividends for many years or have a low proportion of dividends, major shareholders are restricted from reducing their holdings and risk warnings are implemented. Increase incentives for high-quality companies that pay dividends, and take multiple measures to promote the increase in dividend yields. Enhance the stability, sustainability and predictability of dividends, and promote multiple dividends a year, pre-dividends, and dividends before the Spring Festival.
It should be noted that under the guidance of regulatory policies, the cash dividend situation of A-share companies has continued to improve. Statistics show that in 2022, a total of 3,291 listed companies in Shanghai and Shenzhen will pay cash dividends, with a dividend amount of 2.1 trillion yuan, of which 1.6 trillion yuan will be distributed to domestic investors, a year-on-year increase of 22.7%, and the dividend payout ratio (32.5%) and dividend yield (1.97%) are at the middle and upper reaches compared with the world's major capital markets.
There is still room for improvement in cash dividends for A-share companies. First, there are individual "iron roosters" that do not pay dividends all year round, and some companies have not implemented dividends for more than 10 years. Combined with the new "National Nine Articles" and the corresponding draft issued by the Shanghai and Shenzhen Stock Exchanges, it is proposed to take strong restrictive measures against companies that do not meet the dividend standards. The focus is on including companies that have not paid dividends for many years or have a low percentage of dividends in the case of "implementing other risk warnings" (ST). Although this type of ST will not lead to the delisting of companies, most companies do not want to see it. Some profitable companies that have not paid dividends for many years have expressed their "positive response to the dividend policy" and announced their dividend plans when the 2023 annual report is disclosed.
Second, the balance, timeliness and stability of dividends need to be further improved. This is related to the enhancement of investors' sense of gain. The relevant person in charge of the China Securities Regulatory Commission has repeatedly stated this year that it is necessary to promote multiple dividends a year, including simplifying the mid-term dividend review process, compressing the implementation cycle, and promoting the combination of undistributed profits and current performance pre-dividends before the Spring Festival to enhance investors' sense of gain; Guide high-quality large-capitalization listed companies to pay dividends in the medium term, and play a leading role in demonstration.
The practice of paying dividends multiple times a year is very common in mature markets, and some companies even pay quarterly dividends for many consecutive years, but the cash dividends of A-share companies are basically based on annual dividends. The increase in the frequency of dividends is the best reward for investors to hold shares for a long time. The gratifying phenomenon is that a number of companies, including the "Big Five", have announced that they will implement interim dividends in 2024, and the atmosphere of multiple dividends a year is expected to become stronger.
Third, eligible companies can appropriately increase the level of dividends. Under the core value concept of creating good returns for investors, high-performing companies that are in a mature stage of development and have abundant cash flow can appropriately increase the level of dividends. For example, some high-performing blue-chip stocks have implemented special dividends, which has significantly increased the dividend rate.
Fourth, it is necessary to restrain individual companies from paying unusually high dividends. This is a chaotic situation in individual A-share companies, which may damage the ability to repay debts and continue operations, and needs to be guided and regulated in a timely manner.
A-share investors often do not pay attention to cash dividends, and in previous years, they were even more keen to pursue high-transfer stocks. Some investors believe that it is of little significance to hold shares to go ex-dividend after dividends. Some investors hold shares for a short period of time, and because they have to pay dividend and dividend tax, they feel that the dividend return is discounted. In fact, continuous and stable dividends will help enhance investor returns, promote the establishment of a peaceful investment philosophy, and promote the stable and healthy development of the capital market. Where does the money come from for the return on investment in the stock market? According to the concept of value investment, it is to make money for the growth of corporate profits. Then, cash dividends are one of the ways to realize the return on value investment, which not only allows investors to share the fruits of corporate profits, but also brings reinvestment and compound interest funds to long-term investments.
Relevant market participants pointed out that strengthening the guidance of the dividend system of listed companies is not only conducive to increasing returns to investors and improving investor confidence, but also conducive to stabilizing investors' short-term mentality, promoting investors to change to long-term holdings, and reducing sharp fluctuations in stock prices. Therefore, better improving the return level of investors through cash dividends is an important part of promoting the high-quality development of the capital market.
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Chief Producer丨Wang Hui and Che Haigang
Producer丨Li Piguang, Wang Yu, Liu Weimin
Editor-in-Chief丨Mao Jinghui Editor丨Cao Yang