CBA Expect Only Fleeting Impact From Dividend Season

CBA note that "CommSec have collected dividend payment size and dividend payment dates for companies in the ASX 200. They estimate over $A25bn of dividends will be paid between the start of March and the end of April. However, most of the dividends, around $A18bn, will be paid next week and the week ending 2 April. With foreign ownership around one‑third, we assume foreigners have a claim of around $A6bn over the next few weeks. $A6bn is a small share of daily global turnover of the AUD. Around three‑quarters of AUD turnover occurs outside of Australia. But $A6bn is a reasonable share of AUD turnover that occurs in Australia. That is relevant if dividends are paid into Australian bank accounts before being transferred offshore. The US and the UK are by far and away the largest foreign investors in Australia. The US share of total foreign investment is 26% while the UK share is 18%. As an approximation, we estimate US owners will receive $A1.6bn while UK owners will receive $1.1bn of dividends in the next two weeks. AUD may, therefore, endure some selling against the USD and GBP in the next two weeks as dividends are transferred to the US and the UK. This source of AUD selling has much greater potential to move AUD/GBP rather than AUD/USD because AUD/GBP is relatively illiquid in Australia. However, we expect the impact to be fleeting. Dividend payments are too small to lead to a change in the medium trend in the Australian dollar against any currency."