Developing economies in Asia-Pacific face a 4% aggregate drop in dividend payments in 2024, according to S&P Global Market Intelligence research.
The slowdown will be driven by flat or declining payouts for companies in mainland China and India due to economic headwinds, reversing years of double-digit growth.
"The outlook for major developing markets is relatively downbeat compared with the rest of the world," S&P Global Market Intelligence Dividend Forecasting said in its Jan. 17 report. Taiwan is also expected to see significant cuts exceeding 20% as sluggish exports weigh on corporate profits.
But not all Asian markets are facing a dividend drought. Malaysia and Thailand will likely see increases in payouts, highlighting pockets of resilience in the region, according to Dividend Forecasting estimates. Developed markets in Asia-Pacific, including Japan, Australia, Singapore and Hong Kong, are also expected to maintain stable dividend growth of around 2%.
Rate cycle
Diverging monetary policies across Asia-Pacific will likely shape corporate profitability and dividends in 2024. While mainland China remains on a policy easing path to support its economy, India nears the end of its policy tightening cycle and Japan eyes abandoning its long-standing negative rates.
Hong Kong's aggregate dividends are expected to climb 3.5% year over year to US$131.4 billion, according to the report. This rise will be fueled by domestic banks in the city, which have thrived in the rising interest rate environment since 2022, unlike their mainland counterparts facing lower rates.
India's potential rate cuts might provide a lifeline to real estate developers through cheaper loans, the report noted. But a cautious basic resources sector may dampen overall dividend growth, leading to a projected 3% decline.
Developed APAC
Rising yen weakness fueled a surge in Japanese banks earnings, paving the way for a projected 7% increase in dividends to ¥107 billion in 2024. Market Intelligence expects this boost to paint a bright picture for the Japanese market, where banks are expected to be major drivers of dividend growth.
South Korea is also set to see a healthy dividend increase, with the aggregated payouts of KOSPI 200 companies projected to climb 9% to 38.6 trillion won this year, signifying a continued strong performance for the domestic market.
Singapore and Australia are set for a muted dividend scene. Singaporean banks face softened payouts due to potential interest rate stabilization by the US Federal Reserve, while ASX 200 companies in Australia face challenges to grow dividends in 2024 as high inflation and interest rates persist.
Indonesia, meanwhile, presents a mixed picture. While overall dividend payouts are expected to decline 7%, banks are projected to remain the primary contributors, reaping the benefits of robust loan growth despite rising interest rates. Their strategic portfolio rebalancing and focus on consumer loans are key to their resilience, Dividend Forecasting notes.
Thailand and Malaysia are expected to witness positive dividend growth, with projections of 15% and 5%, respectively. Banks are again expected to play a significant role in this growth, particularly in Malaysia, where excess capital buffers provide ample space for dividend increases. Leading players such as Malayan Banking Bhd. and CIMB Group Holdings Bhd. are set to see substantial dividend hikes in 2024.
As of Jan. 19, US$1 was equivalent to ¥148.14 and 1,336.37 South Korean won.
