Abstract
Value investing methods have been broadly researched and applied to various atmosphere of security analysis. It mainly deals with the identification of value securities for possible buy and hold or resale. For further analysis, statistical technique is utilized to inspect the extent and characters of value investing theory in Chinese manufacturing industry. This paper intends to reveal the interactions among returns on investment (ROI) as well as other accounting information filed within financial reports, and also testing the degree of the interaction on returns on investment in China’s manufacturing industry.
Highlights
1.1 BackgroundChina has achieved a brilliant record of rapidly developed GDP on annual basis for the reform policy proposed by Deng Xiao ping since 1979
How can we possibly identify the causes of the poor performance in Chinese stock market and prescribe a fine solution to find out the influencing factors of the returns on investment in Chinese stock market? Many researches on value investing theory has been conducted and applied to stock markets in order to provide the reasons of the questions mentioned above
The results show that the holding yield of value stock portfolio is significantly higher than that of attractive stock portfolio in the first two years of holding period, but there is no significant difference in the third year; Compared with the single variable portfolio, the two variable portfolio has a more significant return reversal, and the value investment strategy is still applicable in China's stock market
Summary
1.1 BackgroundChina has achieved a brilliant record of rapidly developed GDP on annual basis for the reform policy proposed by Deng Xiao ping since 1979. Chinese stock market has underperformed for its drastic distortion in prices from the value embedded in the economic fundamentals. Not any clearly statistical association between economic growth as well as the development of the stock market. Comparing American and HongKong’s stock markets, Chinese stock market suffered long-term volatility and unstable trend since the financial crisis occurred in 2008,which could devastate the confidence from the investors in China. Many researches on value investing theory has been conducted and applied to stock markets in order to provide the reasons of the questions mentioned above. The manufacturing industry has been selected for its significant and particular status in Chinese economy as well as Chinese stock market.Since the manufacturing industry plays a significant role in Chinese economic fundamentals. Based on the criteria (as of 31st December 2019) on the categories of industry in the stock market reported by the CSRC, China’s manufacturing industry comprised 2358 listed companies(see Table 1 below)
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