The Research Of Investment Strategyin Stock Market Of China With PEG Ratio

The Chinese Securities Markets was found in 1990’s, and these have developed a large number of investors. However, incompetent investors or insufficient understanding about the objects might create investment losses. This study analyzed the basic theory of the PE and PEG ratio, and then leverage PEG concept to propose several stock selection methods. The differentiation of proposed selection methods base on different adjustment frequency, the expected growth ratio in these method were estimated with by empirical data instead of predition. The research verified these portfolio selection methods with empirical data of SME board of China Security Market from Jan 1 2006 to July 31 2014, and came to conclusion that: 1) SME board of China Security Market Stock selection methods with PEG ration brings significant performance than the market. 2) Portfolio selection methods with quarterly or semi-annually adjustment earns much better performance than methods with annual adjustment. 3) Profit growth rate of main business can be considered to be the substitute of the EPS growth rate in PEG estimation.