Recently, the CSI 300 index has been hitting new lows, reaching its lowest point since February 2019, which is a thought-provoking situation.
* Continuous decline, seemingly endless. But the reason for this seems to be difficult to describe in a nutshell.
At first, it was thought that the frequent IPOs were the cause, but even after the IPO slowdown, the market did not improve.
Subsequently, there was a view that the major shareholder ** was the culprit, but even if relevant regulations were introduced, ** was still sluggish.
Then, the securities lending business was restricted, quantitative trading was controlled, the RMB exchange rate fluctuated, and various factors took turns, but ** still continued to decline.
There are even voices that blame international factors - the Federal Reserve's interest rate hike policy and the rise in US Treasury yields, which are said to have weakened the attractiveness of global risk assets and affected the valuation of A-shares.
However, even when the Fed's interest rate hike policy became clear and Treasury yields fell, the A** market still showed no signs of stopping, and even the CSI 300 index hit a four-and-a-half-year low.
Globally, whether in the United States, Europe, or the Asia-Pacific region, most of them show a trend of recovery or stabilization. Even countries in an unstable environment are not entirely pessimistic.
However, A-shares and Hong Kong stocks seem to be under pressure alone and have experienced an abnormal **. This situation seems to imply that all the misfortunes and difficulties are concentrated on the a** field.
We cannot ignore the difficulties faced by China's economy in the early days of the pandemic in 2020 and during the full lockdown in 2022. However, the current performance seems to be out of the reach of these factors.
Such a market performance is undoubtedly a severe test of investor confidence, and it also makes people full of questions about the future of the world.
If we say that the valuation of our big A shares is too high and has not been fully adjusted, this kind of ** can still be said, but our A shares have fallen for 2 consecutive years in 2021 and 2022, and the current valuation is close to the lowest level in history
Recently, the performance of the CSI 300 Index has attracted a lot of attention from investors. This is despite the fact that the dynamic dividend yield has exceeded 32%, which is significantly higher than 266% of the 10-year Treasury yield, but the A** field is still sustaining**.
This kind of undervaluation is extremely rare in the history of A-shares. While the rest of the world is rushing, A-shares have been in a row for two consecutive years, which is puzzling.
During the period that began in 2007, A** raised a total of 1708 trillion yuan of funds. However, investor returns have been a declining market, with the CSI 300 index falling from 5,000 in 2007 to less than 3,500.
In the US**, buybacks and dividends totaled about four times the total amount raised between 2018 and 2022, and the returns on A-shares pale in comparison. In 2022, the amount of buybacks and dividends of U.S. stocks reached trillions of dollars, while the return rate of the A** market was less than 1.
What's even more remarkable is that the vast majority of dividends in the A** field are occupied by state-owned assets, and ordinary shareholders receive very little. In the past 16 years, the CSI 300 index has not only not shown a trend, but has shown a trend.
In addition, considering that the ** amount of ** amount per year of the major shareholders of the A** market is close to 60% of the total amount raised, this means that the market is experiencing a large outflow of funds every year.
It seems that this market is more about sucking blood from investors than giving returns. Even if the financial data of most A-share companies is true, the current *** still seems unexplainable.
The market is always accompanied by selling. But under the current low valuation, even if various bailout policies have been implemented, and the dividend yield is higher than the deposit rate and the yield of Treasury bonds, why is there still a continuous selling order?
This could be the effect of a balance sheet recession. Whether it is business owners, residents or financial institutions, they are under pressure to deleverage and need cash to solve debt problems.
From the outbreak of real estate debt to local hidden debt, to the turmoil in the wealth management market, these have led to an urgent need for cash from all walks of life.
*, as part of the assets of many middle class, industrial capital and financial institutions, has become the target of blood drawn by many people and institutions in order to fill the debt hole.
In such an environment, the A** field continues to be under pressure from all sides. The recession of the balance sheet and the deleveraging of the debt of society as a whole seem to be the main reasons why A-shares continue to be in a state of extremely low valuation.
Reminiscent of a decade ago, when the price of Bitcoin was only a few hundred dollars, it has now soared to about 440,000 US dollars, about 300,000 yuan. In contrast, the A** field is still trying to maintain around 3,000 points, which is a thought-provoking comparison.
In such a market environment, investors will inevitably be disappointed in the face of persistent** and depressed returns. The question is, why is there such a strong selling trend at such a low valuation, accompanied by bailouts, and dividend yields that far exceed deposit and Treasury yields?
This situation may indicate that the shareholder is under financial pressure and is forced to sell the equity at a low price. Over the past year, both real estate debt and local hidden debt have triggered turmoil in financial markets, and now we seem to have entered an era of full deleveraging. In this day and age, businesses, residents, and financial institutions alike are looking to reduce debt and prevent risks.
Therefore, in the current market environment, the thirst for funds has become more urgent, resulting in a continuous sale of the A** market. Behind the seemingly ruthless market behavior, the entire economic system is actually undergoing a profound adjustment and transformation.
Against this backdrop, the future direction of the A** field is still full of uncertainty. Investors need to be more cautious about the market dynamics, and at the same time, they are expected to find a new balance to achieve healthy and sustainable development.