JAKARTA (TheInsiderStories) – Aggregate dividends for Hang Seng Composite Index (HSCI) are estimated to grow 6 percent to HK$847.7 billion (US$114.86 million) in 2019 and 8 percent to HK$918.2 billion in 2020, supported by “cash-rich” companies in the banking and real estate industry, said IHS Markit today (11/11).
However, the projected increase in dividends over the short term is modest compared to the average 15 percent of growth in 2017 and 2018. Social unrest, coupled with uncertainty from the United States (US) – China trade tensions, have dampened overall business sentiment in Hong Kong.
Certain sectors namely travel & leisure, retail and real estate continue to feel the pressure as visitors avoid Hong Kong as a destination for either traveling or investing. Dividends from Cathay Pacific, Sa Sa International and Swire Properties are particularly under pressure due to the ongoing social unrest in Hong Kong.
Aggregate dividends from travel and leisure industry are expected to grow 0.6 percent in 2020, much slower than the 15.8 percent growth rate estimated for 2019. Large hotel and casino resorts companies with robust balance sheet and strong cash flow, which primarily operate in Macau, will dominate aggregate dividends from the industry.
Maojun Ye, principal analyst and Qianwen Ruan, senior analyst, Yang Yang, senior analyst at IHS Markit, expects, Cathay Pacific Airways to suspend its upcoming dividend. Aggregate dividends from the retail industry are expected to grow 6.4 percent to HK$11.7 billion in 2020 while they are expected to be flat in 2019, supported by stable dividends from well-known retail enterprises as well as the fast growth in dividends from a few education companies.
Dividend growth from the real estate sector will likely slow over two consecutive years, from 26.1 percent in 2019 to 11.2 percent in 2020. Property companies with large retail and hotel portfolios are expected to suffer the most from the protests, with the weakening consumer sentiment and declining tourist spending.
The 2019 Hong Kong protests , also known as the Anti-Extradition Law Amendment Bill movement, are an ongoing series of rally in Hong Kong since June, 9. The demonstrations, which were triggered by the introduction of the Fugitive Offenders amendment bill by the Hong Kong government.
The tiny island has a GDP bigger than many industrialized countries, low tax and abundant cheap labour, and is a world-class financial centre boasting a stock market with a total value of more than $3.20 trillion.
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