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The Empirical Study of "Growth Trap"in China

Author: LiXue
Tutor: ChenYongSheng
School: Southwestern University of Finance and Economics
Course: Finance
Keywords: growth trap Shanghai 180 Index portfolio cash dividend policy
CLC: F832.51
Type: Master's thesis
Year: 2009
Downloads: 27
Quote: 0
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Abstract

With the majority of the people’s awareness of the investment will be gradually awakened, the term "securities" in the eyes of people to occupy more and more locations can not be ignored, stock assets have become an important component of national wealth in part. For each of the investors involved in the stock market, considered by most the most important question is: which should we have a long-term holders stocks; how to choose a worthy investment in stocks.Based on this issue, the United States as a professor at the Wharton School of Business ? Jeremy Siegel in his book "of investors in the future", adopted by the constituent stocks of the Standard & Poor’s original investment rate of return, as well as keep up with the constituent stocks of adjustment S & P index fund investment yield compared, for the analysis of the value of some of the classic thesis has been accustomed to using, as well as investments made his point of view of the new study, to verify the results proved that the new company and the industry can not provide investors with Returns, and they bring the return on investment is often not as good as those a few decades ago on the old enterprises have been established.Siegel will be the phenomenon known as the "growth trap." China’s securities market is still in the development of an advanced stage,and is a relatively imperfect stock market, China’s stock market has its own unique characteristics. All along, for example, the majority of the scholars put forward by China’s low-dividend stock market, will allow us to share the investment and Siegel’s "growth trap" run? China’s stock market also exist Siegel summed up as the law? Siegel’s thesis is that the same is not suitable for China’s securities market? He raised the investment strategy of Chinese investors is useful?In order to answer this series of problems, the paper choice for the SSE 180 Index study, building a portfolio of the two. The first portfolio in accordance with the July 1, 2002 the market value of the weight on the index in the first 180 investment companies, investment will be obtained during the dividend reinvestment for; the second portfolio is closely follow the constituent stocks of adjustment The SSE 180 index fund portfolio. Start time is scheduled for July 1, 2002, the deadline set for December 28, 2007. Through the combination of the two obtained by the rate of return compared to confirm whether China’s stock market has the same conclusion, the Chinese investors, whether or not to adopt the same strategy to invest. In this paper,includes the following five sub-parts:For the first part of the introduction, this article details the research background, the issues put forward and expounded the significance of topics. This article describes the research ideas and the structure of the paper, summed up the last of this article and the lack of innovation.The second part, show the research results of " Jeremy Siegel". On the "growth trap" refers to the fast-growing industries and companies, may not give investors good returns. "Jeremy Siegel " S & P 500 companies of the original portfolio with the S & P 500 each yield a comparative analysis, 50 years after the investment As a result, the original company’s portfolio performance is far better than Index Fund.The third part is the core content of this article. The author take the same empirical analysis. I then built two portfolio analysis, the conclusion is that China does not exist "growth trap", the Chinese investors should not be taken with the investment strategy belong to "Jeremy Siegel".Fourth, the author of the third part of the study results analysis. This is mainly because that China’s listed companies is too low dividends, resulting in dividend re-investment rate of return of the little contribution in order to lower the growth rate of listed companies, not their accumulated enough shares to defeat the high number of high-growth emerging sectors of the stock of listed companies .Part V, The author shows the limitations of this paper, as well as further research. Due to subjective and objective conditions, the existence of this article the following questions: First, the Shanghai 180 index samples is so few that it may be can’t to comply with the requirements; Second, the methodology of Shanghai 180 Index and the Standard & Poor’s 500 index is different. In this paper, the research is to continue with the gradual improvement of China’s securities market.

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