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By Jeremy Glaser | 04-26-2010 02:39 PM

Asian Dividend Pool Keeps Getting Deeper

Asian dividend opportunities can be found across geographies, sectors, and market capitalizations, says Matthews Asia's Jesper Madsen.

Jeremy Glaser: Looking at the sectors, even in the United States, a lot of the dividend-paying stocks are very concentrated in areas like utilities and REITs. Is that the same in Asia, or do you find that there's a broader range of dividend opportunity?

Jesper Madsen: About a third or so of dividends would be paid out by financials. Financials still make up a large portion of the listed companies in Asia, so that's not too surprising.

But then about 10 percent roughly you have industrials. You would have energy and so on and so forth. So you do have I would say a fairly broad universe to work with, again, diversified not just across sectors, but also across countries.

For instance, while Japan is still the largest contributor to dividends in the broad Asia Pacific, if you combine China and Hong Kong, you actually get the largest contributor to dividends at around $73 billion paid out of $237 billion or so. That gives you a raw measure. Japan is paying out about $68 billion or so out of about $237 billion.

But it's also the growth rate that we've seen in those dividends in terms of new listings that are coming to market. I want to stress that. Again, as an investor in Asia, it's not just the growth that we see at the company level, but also the evolution, the further deepening, of the capital markets in that space.

To give you a sense, with every new listing and every new IPO, we've seen a lot of them obviously come to market in Hong Kong, for instance, but in broader Asia as well. With every new listing we get access to a new dividend stream, and you find dividend payers across the whole capitalization spectrum.

So you can have small companies that pay dividends almost upon IPO. The same thing for larger companies. That might even be not so surprising, but actually it is maybe surprising to many that you have small companies that pay dividends in Asia.

To give you a sense, 75 percent, about 3/4, of all the dividends paid out by Chinese and Hong Kong companies - this is excluding, as you say, the Asia market for domestic investors in China, so only the markets that are available to foreign investors - 3/4 of all those dividends were paid out by companies that were not even listed back in '98.

Again, these are from new listings of companies and that ongoing evolution that we've been seeing in the marketplace.

So even as we sit here and speak today, that dividend pool is expanding, not just because of the earnings growth, but also because more and more parts of the economies in Asia become listed and available to international shareholders.

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