Study On Value Investment Strategy In China Stock Market

Through constant development in the past decade, China's securities market features marvelous new growth and transition though some problems remain unsolved. However, with imminent completion in stock right splitting reform, a fundamental problem hindering market development has been basically solved. Meanwhile, with gradual improvement in market system construction, the conception of value investment is gradually recognized by investors and the securities market is entering an era of game among institutional investors. Based on this, it is of particular importance as for how to make flexible use of value investment strategy.The present article outlines the theoretical foundation of value investment and present-day popular value assessment model, and performs a brief analysis about theoretic research of value investment both home and abroad. Chapter 3 performs preliminary analysis and comparison concerning key strategies for value investment, strategy on margin of safety, conservative strategy, comprehensive strategy and active investment strategy. Chapter 4 points out the problems currently existing in China's securities market and analyzes the feasibility of implementing value investment conception in our country.Based on the above theoretic analysis, The main body of the text is chosen from May 2000 till May 2005, the scope of our research is the 180 stocks in the Shanghai stock exchange floor , and the stocks selected out at present ultimately is at least 1 year's experience in the market before May 2000, altogether 81 stock, B/M (the net asset base to share price) to be a divided standard, arranging according to the size in progress to sample stock, the share ranging first 20 stocks as value combination, the following 20 as growing combination. Study these constitutes' behavior and make contrast in the scheduled time of 1 year respectively. Judging from the econometric analysis , in the field of earning ratio, when the 3 months of scheduled time starts , value combination, whose earning ratio overtops obviously to growing combination; The risk displays making use of CAPM-βcheck to reach value and growing combination is well-balanced. This is explained under same risk condition, the earning ratio of the value combination overtops growing combination. To further the correctness of demonstrative analysis, the author leverages his practical experience in combination with his implementation of value investment strategy in CC Securities. Ultimately, this article comes to a convincing conclusion.