A-shares have traditionally been positioned as a financing market, but are now undergoing a transformation into an investment market. Due to excessive financing over a long period in the past, there is now a shortage of market funds. A-shares have become a sellers' market, with speculation on high dividend stocks leading to three major unfavorable factors for A-shares.

From the introduction of the "China Special Valuation" on November 21, 2022, to the speculation on high dividend stocks that began last year, it has been two and a half years. In fact, both the China Special Valuation and dividend stocks are based on the theme of high dividend payouts. However, looking at the practice over the past two and a half years, the speculation on high dividend stocks has at least three major unfavorable factors for A-shares.

It is normal for an investment market like A-shares to have ups and downs, and the stock market cannot guarantee that most people will make money. However, the speculation on high dividend stocks has led to a continuous decline in the A-share index and a constant new low in total market value.

1. The continuous rise of high dividend stocks has led to a loss in the total market value of A-shares. As of the close on Friday this week, while the four major banks and the banking sector have been continuously setting new highs, the total market value of A-shares has already broken through 70 trillion, setting a new low for this year. According to Tongdaxin software, the highest total market value of A-shares in 2022 was 92.43 trillion, and after closing on Friday, the total market value of A-shares was 69.78 trillion, with a loss of 22.65 trillion in total market value. If we calculate for 210 million stock investors, each investor's loss in market value is about 110,000 yuan. Now, the actual number of stock investors operating does not exceed 50 million, and if calculated in this way, the loss in market value is even greater. It's a real eye-opener when you do the math.

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The market value of the six major bank stocks now exceeds the total market value of more than 1,300 stocks on the ChiNext board. It's unclear whether this is a good thing or not. The original purpose of establishing the ChiNext board was to benchmark the US Nasdaq. Now, the total market value of the ChiNext board has fallen by half. At least 20% of the ChiNext stocks are expected to have better growth prospects than the six major banks in the future!

2. Dividend stocks suppress the upward space of A-shares. Due to the rise of dividend stocks, which is limited by the dividend rate, they cannot continue to rise significantly. The four major banks are now continuously setting new highs, but they have not opened up the upward space for A-shares, especially in the recent period. As the four major banks continue to set new highs, the Shanghai Composite Index has become lower and lower. Now, not only has the iron bottom of 3,000 points not been maintained, but if it were not for the strong pull of the four major banks, it is estimated that 2,800 points would have already been broken. Because high dividend stocks are large-cap stocks that absorb a large amount of liquidity, the liquidity of A-shares is now tight, and the transaction volume is continuously setting new lows.

The speculation on high dividend stocks in A-shares, especially these dividend stocks, are all in the Shanghai market. It should be said that these stocks should have a significant rise in the Shanghai Composite Index. However, every time the four major banks rise, there are always more than 4,000 stocks falling, leading to a lack of new funds inflow in A-shares.

3. The rise of high dividend stocks has led to continuous redemption of funds by fund investors. In 2020 and 2021, when the fund's heavy stocks rose significantly, a number of three-year closed-end funds were issued, and now it is time to redeem the funds after the three-year period. The "Mao Index" that was speculated on high dividends, drinking, taking medicine, and blowing air conditioners, were all high dividend stocks, and now they have fallen to the point where they are unrecognizable, with funds losing 30-50% everywhere. It is obvious that there is no hope of recovering from such losses, and fund investors can only redeem and leave. It is said that some public funds are now selling their loss-making stocks and starting to buy bank stocks. It is unknown whether the sharp decline in the liquor sector is related to this. It is estimated that in the near future, fund investors will have to bear the loss of buying bank stocks at high prices.

The upward space for dividend stocks is narrow. As long as they rise to a certain point, the dividend rate will decrease, so the upward space for these high dividend stocks is limited. Once the high dividend stocks turn, the downward space will be very large. Just open the monthly line of the four major bank stocks and see for yourself. Look at the current coal sector stocks, which were also very popular in the first half of this year, but now that the mid-year report has been announced, some coal stocks' performance has fallen by more than 50%, and many stocks have fallen back. The dividend index of A-shares had already reached its peak on April 29.

The three major technology companies in the US stock market, NVIDIA's market value increased from $2 billion at the time of listing to $3.1 trillion now, an increase of more than 1,500 times, Apple's market value increased by more than 1,200 times, and Microsoft's market value also increased by more than 1,000 times. The long-term bull market in the US stock market owes much to technology stocks, and only technology stocks can lead the overall market to rise and create a healthy bull market.The above is my personal opinion only and should not be considered as investment advice. Any actions taken based on this information are at your own risk, and I will not be held responsible for any gains or losses incurred.