#ideas2invest: China Banks as Strong Dividend Play

Story of the day

China banks have seen increased volatility over the past months as homebuyers refuse to service their mortgage obligations on unfinished residential projects. However, the impact will be limited – the real estate sector as a percentage of China’s gross domestic product has remained relatively low since 2010.

We maintain our constructive view on large state-owned banks for their attractive dividend yield, balance sheet strength, and the government's unwavering commitment to maintain the wellbeing of their country's economy.

What does this mean for your portfolio?

Gain exposure to China banks for the following reasons:
1. They have maintained dividend payments and remain a strategically important sector to the government
2. Affected real estate projects contribute a manageable portion of China’s GDP
3. The government is likely to introduce policies to alleviate the situation