Though the concept of value investment was introduced to Chinese in 1996, it has been accepted by few of the investors. Mentioning this may bring you questions, such as “is the investment just so valuable?”, “does it apply to Chinese stock market?”
Let’s focus on the first question. We all know the most famous investor, the “oracle of Omaha”, the “richest billionaire” , the boss of Berkshire Hathaway, Warren Buffett, who always emphasizes the “value” of a company and will never touch a stock if it is not worth being kept for 20 years. That does not mean we have to believe an old rich man far across the Pacific Ocean and follow his steps, but will you buy a stock without “value”?
We can see “value investment” all over the media, magazine and newspaper, and men in the street talk about it from time to time. They know it, but they don’t do it. There are reasons.
In China, most listed companies do not prefer to give the dividend to their shareholders. There is a conflict of interest between shareholders and the development of the enterprises. Many big companies belong to the government, the profit needs to enable those important programs which might involve with essential interests of our great country. Whatever, people do not buy stocks in hope of dividend, instead they prefer the capital gain, that’s why there are so many speculators.
The stock market is not well developed and most people have little knowledge about stocks let alone value investment. They rushed into this market just because people around them were earning money, nobody invests but gambles. They buy and sell their stocks depending on some information even feeling.
Since “nine pieces of national advice about stock market”, the situation has been going better. “China security regulation commission (CSRC)” has made a series of rules to control and supervise the market.
No doubt Chinese enterprises are becoming larger and stronger. Some big companies are playing an important role in the world economy. There are many good companies with potential out there for value investors.
With the education of CSRC and investors learning from the market, people are more conscious about risk. More are becoming interested in value investing and start to coach their investment other than gambling in this way.