A-shares not as cheap as valuations suggest

Given their poor track record in paying dividends, A-shares are not as attractive as their low valuations suggest.

A-shares not as cheap as valuations suggest
Shanghai's stock exchange

After yet another big tumble in the A-share market, Chinese stocks look like a good trade for 2013. But appearances can be deceptive.

“Share price valuations may be cheap but their dividend payout is relatively low,” said Edward Huang, strategist at Haitong Securities International. “A low dividend payout ratio of around 30% doesn’t make the low valuation attractive.”

China’s equity markets have long favoured issuers over investors, with little transparency and a...

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