Will China'S Stock Market Really Usher In The Era Of Value Investment

Last Friday I attended a symposium on global asset allocation. To my surprise, the vast majority of public and private equity stars are emphasizing value investment, which is in sharp contrast to last year's talk about growth, new China, network technology and industry 4.0. So, will China's stock market really usher in the era of value investment? Since then, the regulatory authorities have significantly tightened the arbitrage model of refinancing such as backdoor listing and private placement after the privatization of China Concept Shares, although no relevant policies and regulations have been introduced so far. However, as an extremely sensitive investor to the market, it has responded quickly, and the prices of those stocks originally belonging to "shell resources" have dropped sharply. In addition, Cyclical stock It has suffered setbacks, and the growth of small and medium-sized enterprises in the past few years has also been overdrawn. Therefore, it is reasonable to increase the allocation proportion of value stocks with low P/E ratios.

However, is it a bit important to think that the era of value investment is coming? That is, the current situation is regarded as the future trend. This is a mistake that people often make when judging trends, that is, to give too much weight to current influencing factors and too little weight to past influencing factors. Because the current influencing factors have a greater impact on everyone's mood, but as time goes on, the mood will return to normal. For example, at the beginning of the year, with the rebound of commodity prices, many investors believed that a new round of economic cycle was about to start, so cycle stocks rose sharply. However, with the continuous disclosure of macroeconomic data, the theory of cycle rise was quickly falsified.

This shows that only long-term factors can affect the long-term trend, and only short-term factors can contribute to the short-term trend. The reason why investors and market analysts often make collective misjudgments is that they often use short-term factors to promote long-term results. The same is true for macroeconomic analysis. Monthly data and even quarterly data are only short-term factors and cannot reflect long-term trends. Moreover, once the trend is formed, it will last for a long time. Therefore, I often say that the long-term trend is consistent with deduction, and the short-term rebound is consistent with dialectics. Investors and scholars always want to find and welcome something, but history will not change its rhythm because of your eager expectations.

The regulated market is represented by the regulation of stock issuance, including the issuance scale and price, as well as the regulation of market access and exit. Although the Exchange implements the membership system, it has not held a general meeting for 20 years, and the Exchange has only been established for 26 years. In today's mature securities market, most exchanges are corporate, and many exchanges have been listed, including the Hong Kong Stock Exchange and Taiwan Stock Exchange. In contrast, domestic stock exchanges, as subordinate departments of regulators, need to undertake too many tasks and responsibilities. Under the pressure of multiple objectives, their marketization degree is difficult to improve.

For example, the delisting system of listed companies is an important system to solve the problem of survival of the fittest. Although there has been a delisting system for A shares for a long time, it is very rare for companies to actually delist. The reason lies in the good intentions of protecting the interests of "small and medium-sized investors". However, such protection can only encourage speculation and make investors imagine that "black chickens become phoenix", which is not conducive to the formation of Value investment idea. Another example is that the registration system can make the issuance system more market-oriented, but it has been delayed.

In terms of openness, due to the implementation of capital control, domestic investors shall not directly invest in the securities of overseas exchanges through brokers. At present, only the Shanghai Hong Kong Stock Connect is available, which is also achieved through the interconnection between Shanghai Stock Exchange and the Hong Kong Stock Exchange. Due to the limited investment targets selected by the Shanghai Hong Kong Stock Connect, the scale of mainland investors' investment in Hong Kong stocks is not large, and the quota is far from enough. In terms of the opening up of the securities market, the degree of openness is also small. QFII adopts quota management. By the end of 2015, the market value of QFII plus RQFII accounted for only 1% of the current market value of A-shares. Compared with South Korea and Taiwan, QIFF quota management has long been cancelled.

The deregulation of the securities market is more beneficial to the formation of the value investment concept. If the issue is limited in price and quantity, it will artificially cause a shortage of supply. Over the past 26 years, the market trading arbitrage mode of speculation on new stocks, small stocks and short stocks has been sustained for a long time, which is also related to the issuance control under the thinking of maintaining market stability. The control has led to the shortage of new stocks and the scarcity of small market values. From the perspective of market opening, two-way opening at home and abroad is conducive to diversification of investment channels, and there is more choice for investment, which will not cause excessive speculation because there is only one channel for domestic stock market. At present, even the stock markets of India, South Korea, Indonesia, the Philippines and other emerging markets are highly open, which is reflected in the proportion of foreign investors, which is much higher than China's 1% level. For example, South Korea and India are both about 30%.