Dividend surge pointing to healthier market

Record dividend payouts ahead of the Spring Festival are signaling a structural shift in China's equity market, with listed companies placing greater emphasis on shareholder returns — a development analysts say will help accelerate foreign inflows in 2026 and beyond.

Data from market tracker Wind Info show that 290 A-share listed companies — calculated based on equity record dates — completed cash dividend distributions totaling 389.8 billion yuan ($56.4 billion) between Dec 1, 2025 and Feb 13, 2026, the last trading session before the Spring Festival break, setting a record high for pre-Spring Festival dividend payouts.

Dividend payments made ahead of the Spring Festival are seen as a barometer of corporate willingness to return value to shareholders — echoing China's tradition of handing out red envelopes during the holiday season.

Financial institutions continued to dominate dividend distributions. From Dec 1 to Feb 13, banking and nonbanking financial institutions accounted for 281.1 billion yuan in preholiday dividends, over 70 percent of the total, said Wind Info.

Private enterprises showed a marked rise in dividend willingness. By the end of January, preholiday dividends paid by private listed firms reached 61.6 billion yuan, surging 130 percent year-on-year.

Foxconn Industrial Internet, along with Gree Electric Appliances and dairy producer Yili, all made their first-ever Spring Festival dividend payouts, distributing 6.6 billion yuan, 5.6 billion yuan and 3 billion yuan, respectively.

Market mavens said the record-setting payouts reflect the structural change of Chinese listed companies strengthening shareholder reward mechanisms, a key marker of China's pursuit of high-quality capital market development.

The country's regulatory framework has increasingly focused on shareholder returns, with a nine-point guideline on capital market reform in 2024 and the revised corporate governance code effective in January steering the market away from a "financing-first" model toward stronger shareholder returns.

Patrick Zweifel, chief economist at Pictet Asset Management, said China's reforms aimed at strengthening shareholder returns and dividend payouts are improving the long-term growth prospects of the equity market, drawing parallels with shareholder-value enhancement programs previously rolled out in Japan and South Korea.

For years, Chinese equities delivered relatively modest investor returns despite solid economic and earnings growth, largely because companies placed limited emphasis on dividends, buybacks and other shareholder reward mechanisms, Zweifel said. Recent policy-driven shifts are helping to reverse that pattern.

This, together with the country's consumption-led economic rebalancing and business cycle factors, underpin Pictet's overweight position in Chinese equities, Zweifel said.

Official data showed that cash dividends paid by A-share listed companies reached 2.55 trillion yuan last year, setting a record high.

A Goldman Sachs report forecasts that cash returns by Chinese listed companies — including dividends and buybacks — could hit another record high of almost 4 trillion yuan in 2026, adding that stocks with stable dividend yields may add diversification benefits for portfolios focused on artificial intelligence and technology sectors.

On Monday, the Hang Seng TECH Index in Hong Kong rose 3.34 percent to close at 5385.35 points. Major technology heavyweights posted broad gains, boding well for the performance of growth-oriented A-share companies as the market reopens on Tuesday.