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editor's note: for some time, the a-share market has been under pressure due to complex internal and external market factors, and it is difficult to give full play to its resource allocation, value discovery, wealth management and investment functions. no matter how the market evolves and develops, it always has its own laws. seeing the history clearly will help us discover the future. at present, broadening our horizons and thinking calmly will help us accurately grasp the historical position of the a-share market, see the marginal improvement in the supply and demand relationship of the stock market, and wait for the series of measures to activate the market to accumulate momentum and take effect. starting today, securities times will launch a series of reports on "discovering the investment value of a-shares". through in-depth interviews and data mining, it will present the positive changes taking place in the a-share market from multiple angles, in order to build consensus, boost confidence, and jointly promote a-shares out of the downturn and onto a healthy and prosperous development track. please pay attention.

recently, the a-share market has repeatedly broken down, and many investors are confused. however, if we jump out of short-term fluctuations and compare the four historical bottoms in the past two decades, we can find that the current a-share market has entered the value investment area in terms of both overall valuation level and cash dividend return rate. combined with the continued efforts of the "combination punch" to stabilize the market and the marginal improvement of the supply and demand relationship in the stock market, the a-share market is expected to usher in a turnaround in the future.

a-share market price-to-book ratio is lower than the four major historical bottoms

valuation being cheap enough is the most basic bottom feature. the current valuation of the main a-share indices has reached or is close to the four generally recognized historical bottoms since 2000. as of yesterday's close, the rolling p/e ratio of the csi 300 index (the same below) was less than 11 times, and the shanghai composite index was slightly higher than 12 times, both lower than the two historical bottom levels in 2005 and 2008, and slightly higher than the lows in early 2019 and june 2013. the p/e ratio of the wind all a index is 14.99 times, lower than the historical bottom level in 2005 and close to the bottom level in 2008.

the price-to-book ratio can better reflect the current undervalued status of a-shares: the price-to-book ratio of the shanghai composite index is 1.13 times, the price-to-book ratio of the csi 300 index is 1.16 times, and the price-to-book ratio of the wind all a index is 1.29 times, all of which are lower than the previous four historical bottoms; the number of stocks below the net value exceeded 800, accounting for more than 15%, which is higher than the proportion of stocks below the net value at the previous four historical bottoms.

looking at the entire history of a-shares, the current a-share valuation is at a historical bottom. among them, the price-earnings ratios of the shanghai composite index, the csi 300 index, and the wind all a index are all below 16% of the historical percentile, and the price-to-book ratios are below 0.1% of the historical percentile. this monday, the price-to-book ratios of the shanghai composite index and the wind all a index hit a new historical low.

from a horizontal perspective, a-share valuations are also at a relatively low level in major global markets. the csi 300 index and the shanghai composite index are relatively undervalued in terms of price-to-earnings ratio and price-to-book ratio among major global indices. the price-to-earnings ratios of the two major indices are less than half of those of the three major u.s. stock indices, and their price-to-book ratios are less than a quarter of those of the three major u.s. stock indices.

a-share dividend yield is at an all-time high

high dividend yields are also an important feature of the market bottoming out. some institutions have found that the spread between the one-year treasury bond rate and the a-share dividend rate in the past year has narrowed, or even inverted, which is often a signal that the market has entered the bottom area. the reason is that when the dividend rate is close to or even higher than the bond rate, the stock market yield is more attractive and the allocation value of stock assets is improved.

the dividend yields of the shanghai composite index, csi 300 index, and wind all a index are 3.06%, 3.36%, and 2.64%, respectively, which are significantly higher than the previous four historical bottoms, and are at 99.09%, 98.64%, and 99.92% of the historical percentiles, respectively. it is worth mentioning that the dividend yields of the above three indices have reached about twice the one-year treasury bond interest rate, and investors' cash dividend returns have improved significantly.

in the first half of the year, the "national team" bought more than 460 billion yuan

in addition to the bottoming characteristics such as low valuation and high dividend yield, investment institutions generally believe that important bottoms in history often appear in the combination of "policy bottom-market bottom". for example, the equity split reform in 2005; the three major policies to rescue the market and the "four trillion" investment plan in 2008; and the comprehensive reduction of the reserve requirement ratio by the central bank in early 2019.

at present, the a-share market has a clear policy bottom, and the policy "combination punch" to activate the market and boost confidence continues to exert force, covering investment reform, financing optimization, improvement of trading mechanism, reduction of trading costs and other aspects. in addition, the "national team" has entered the market with real money to help stabilize the market. according to rough estimates, the "national team" has entered the market through stock etfs in the first half of the year with a total of more than 460 billion yuan, of which the four major csi 300 index etfs (huatai-pinebridge csi 300 etf, e fund csi 300 etf launch, hua xia csi 300 etf and harvest csi 300 etf) have increased their holdings by more than 310 billion yuan. since the second half of the year, the buying power of the "national team" has not weakened, and the net inflow of funds from the above four major csi 300 index etfs has exceeded 222 billion yuan.

the amount of a-share repurchases this year hit a record high

experience shows that when a-shares enter a stage bottom, they are often accompanied by industrial capital increasing its holdings and slowing down its reduction, which helps partially improve the relationship between the supply and demand of funds in the stock market. according to statistics from the securities times data center, since the beginning of this year, major a-share shareholders have cumulatively reduced their holdings by 18.071 billion yuan, the lowest value since the same period in 2007, and less than 7% of the same period last year. executives have accumulated a net increase of more than 2.9 billion yuan, the first net increase in the same period since 2007. the substantial reduction in the scale of net reductions, on the one hand, shows that the new reduction rules have taken effect, reducing the pressure of capital outflows; on the other hand, the willingness of major shareholders and executives to spend money to increase their holdings also reflects their recognition of the value of their own stocks and enhances the stability of the market.

at the same time, the repurchase of listed companies has reached a peak. data shows that since the beginning of this year, more than 1,000 a-share companies have completed repurchases of more than 136 billion yuan, setting a record high for the same period in history and increasing by 1.7 times compared with the same period last year. the advance and retreat of industrial capital has always been one of the important indicators of the bull-bear transition of the stock market, and its trend is worthy of attention. the increased repurchase efforts of listed companies indicate that the investment value of a considerable number of high-quality a-shares has been recognized by industrial capital.

(original title: compare the four major historical bottoms to rationally grasp the current value orientation of the a-share market)