Chinese Assets Rally as Market Sentiment Improves; Goldman Projects Record 3 Trillion Yuan in Dividends by 2025

On July 8 (U.S. time), while the three major U.S. stock indices experienced mixed movements, Chinese assets recorded strong gains. The Nasdaq Golden Dragon China Index rose as much as 2% intraday before closing up 0.71%. The 2x leveraged China Internet ETF surged by more than 5% at its peak and ended up 3.35%. Huami Technology rallied over 107% intraday, triggering a trading halt, and ultimately closed with a gain exceeding 47%. During the Asian trading session, A-shares and Hong Kong stocks also saw a broad-based surge.

Analysts attributed the rebound to deferred concerns over tariff risks following former U.S. President Trump’s executive order pushing the reciprocal tariffs deadline from July 9 to August 1. This led to a boost in risk appetite and helped indices continue their upward momentum, suggesting the market remains in a bullish cycle.

In the Hong Kong market, the Hang Seng Index climbed 1.09%, regaining the 24,000 level, while the Hang Seng Tech Index rose 1.84%. Financial stocks led the rally, with Guotai Junan International gaining over 28%, Shenwan Hongyuan Hong Kong up more than 19%, and Bright Smart Securities advancing over 15%. In mainland markets, the Shanghai Composite Index rose 0.7%, nearing 3,500 points, the Shenzhen Component Index increased by 1.46%, and the ChiNext Index surged 2.39%.

Chinese concept stocks also recorded notable gains. Apart from Huami Technology, Lakeside Bio rose over 40%, Mogu increased more than 24%, Daqo New Energy advanced over 10%, and Tiger Brokers added more than 8%. Xunlei, WeRide, and AiHuiShou were all up more than 7%, while Futu Holdings gained over 6%. Kanzhun, Niu Technologies, iQIYI, JD.com, Alibaba, Pinduoduo, Tencent Music, and BeiGene all posted increases exceeding 1%.

Market strategists from JPMorgan wrote that with U.S. indices near all-time highs and geopolitical risk premiums largely absorbed, investors should consider re-hedging positions before the August 1 tariff deadline. Piper Sandler analysts noted that despite renewed trade concerns, overall market sentiment remains bullish, with reduced investor focus on tariff-related news.

According to China Galaxy Securities, the technology sector continues to show strong investment potential due to favorable policy support, leading earnings growth, and relatively low valuations. With supportive domestic consumption policies, consumer sector performance expectations are improving, particularly for undervalued Hong Kong-listed pharmaceutical and discretionary stocks. In times of global uncertainty, high-dividend stocks may offer stable returns.

Shenwan Hongyuan Securities pointed out that the breakout of the Shanghai Composite Index has itself become a market catalyst, enhancing risk appetite and spreading momentum. Thematic opportunities also emerged in areas such as stablecoins, defense, anti-involution narratives, and bank stocks aligned with insurance themes, reflecting broader investor attention on positive drivers.

Goldman Sachs, in its latest report, projected that Chinese companies listed both onshore and offshore will distribute a combined 3 trillion yuan in dividends by the end of 2025, setting a historic record. In 2024 alone, over 4,300 Chinese companies listed across A-shares, Hong Kong, and U.S. markets paid out 2.7 trillion yuan in dividends. Goldman attributed this to strong policy momentum from the new “Nine-Point Guidelines,” robust cash flows, and healthy reserves, leading to record shareholder returns in 2024.

The guidelines, issued by the State Council in April 2024, aim to enhance oversight of corporate dividend payouts and include measures to limit stock sales by major shareholders at companies with insufficient dividends. The policy encourages higher dividend yields and rewards high-dividend-paying firms.

Looking ahead, Goldman expects Chinese listed companies to reach 3 trillion yuan in dividends and 600 billion yuan in buybacks by the end of 2025, representing year-on-year increases of 10% and 35% respectively. These payouts are expected to attract more investors and offer competitive returns in the prevailing low interest rate environment. Goldman’s report further noted that if listed firms allocate 10% of their cash outlays to dividends or buybacks, company valuations could rise by 14% on average. If payout ratios align with averages in Asia and Europe, A-share valuations could rise by 15% to 25% over the next decade.