Summary of Key Points
Recently, the market has witnessed a "silent shift in capital allocation": funds that were previously withdrawn from the AI sector at high prices have begun to flow into traditionally valued industries with high dividends (such as banks, insurance, and shipbuilding, often referred to as "old-established stocks"). The CSI Dividend Index has rebounded by 10%, attracting an additional 30 billion yuan in investment through dividend ETFs. Meanwhile, the AI sector is experiencing adjustments due to excessively high valuations and the withdrawal of leveraged funds, leading to a clear divergence among investors. Experienced investors are holding onto "stable assets" to recover their losses and make profits, while new investors pursuing AI stocks have suffered significant losses. Historical lessons (such as the 2015 bull market) remind retail investors not to be blinded by grand narratives and to focus on valuations and certainty.
1. Capital Quietly Shifting from AI to Dividends
The AI sector was extremely hot in the first half of the year, but recently, funds have started to move towards traditional industries. The most evident sign of this shift is the CSI Dividend Index, which rebounded by 10% just over a month after hitting a bottom on June 30th. More concrete evidence of capital inflows comes from ETFs: since May, over 30 billion yuan has entered the market through dividend-related products, with an additional 5 billion yuan in July alone.
For example, an experienced investor named "Painkiller" avoided the AI craze during the peak period and focused on stocks in banks, insurance, and shipbuilding. His investment in these "old-established stocks" yielded a maximum return of 50% in April, and although his profits have dropped to 20% recently, he still made a 10% gain from buying China Merchants Bank in July and 20% from buying China Life Insurance. He says, "Tech stocks have risen too wildly; I prefer assets with low valuations and stable performance."
2. Different Outcomes for Two Types of Investors
The market differentiation is quite clear:
- Experienced Investors: Those with decades of investment experience avoid hot topics and focus on low-valued stocks, which not only helped them recover their losses but also generated profits in July.
- New Investors/Small Retailers: For instance, Wang Xing from Beijing suffered heavy losses in tech stocks this half-year, but the dividend funds he invested in a year ago have turned from losses to break-even, with just 90 yuan missing to achieve profitability. A saying within his small investor community goes, "Those who bought tech stocks in the past six months lost heavily in July, while those who invested in old-established stocks recovered their losses."
The reason is that experienced investors place more emphasis on safety, while new investors are easily attracted by stories about domestic substitution and the potential of technology-driven growth, ignoring valuation bubbles.
3. The "Irrational Heat" in the AI Sector
The problems in the AI sector are becoming apparent:
- Valuation Bubbles: Since September 2024, 110 AI stocks with price increases of over 100% (such as Guangdong Communication and CPO) have an average PE_TTM (price-to-earnings ratio based on current profits) of 222—meaning it would take 222 years to recoup the initial investment!
- Leveraged Fund Withdrawal: The balance of margin trading funds has dropped from 3 trillion yuan to 2.69 trillion yuan, a decrease of 310 billion yuan. Analysts are concerned about the risk of further declines triggered by leveraged investments.
Some believe the AI bull market is over, while others hope for large-scale capital to rescue the sector, but in reality, funds have already shifted to the dividend sector.
4. Why Are Low-Volatility Dividends Suddenly Attractive?
Low-valued stocks with high dividends are now highly sought after because of their high returns:
- The yield on 10-year government bonds is only around 1.7%, whereas the dividend yield of the CSI Dividend Index ranges from 5.2% to 5.65%, more than three times that of government bonds.
- The annual return on money market funds is only 1%-1.4%, compared to 3-5% for dividend assets.
Fund managers point out that in today's low-interest-rate environment, investors prefer "stable and reliable returns," with dividend assets representing this stability.
5. Learn from History
The 2015 bull market was driven by the grand narrative of "Internet+," which led many to buy stocks at high prices. Companies that subsequently saw price increases of over 100% later experienced significant declines (with some losing more than 50%). Wang Xing is a prime example of this, taking ten years to recover his losses.
The current AI narrative of "revolutionary growth" is similar to that of 2015. Experienced investors warn that while the overall direction may be correct, it's important to control investment positions and avoid rushing into markets with valuation bubbles.
In Conclusion
The market is shifting from focusing on stories (grand narratives) to focusing on financial fundamentals. AI stocks are not worthless, but they are currently too expensive. Traditional dividend stocks, though "old," offer stability and tangible returns. Retail investors should not be overly ambitious; instead, they should consider the time it will take to recoup their investments. After all, investing is about making informed decisions, not relying on luck.