Today, the high dividend sectors such as banking, oil, coal, and infrastructure in the A-share market continued to plummet, severely dragging down the performance of the Shanghai Composite Index, which fell by more than 1%, with the battle to defend the 2700 point level being launched. Moreover, as I have previously analyzed with everyone, the recent A-share market has primarily seen declines at both ends of the dumbbell strategy—high dividends and AI technology, while the middle of the dumbbell strategy—sectors closely related to economic expectations such as consumer goods, pharmaceuticals, and new energy—have not experienced significant drops, and some individual stocks with improved logic have already stabilized and rebounded.

For example, while the Shanghai Composite Index fell by more than 1% today, the ChiNext Index was already stronger than the Shanghai Index during the session, and it turned red at the end of the day with the assistance of the national team. It can be seen that the ChiNext Index ETF significantly increased in volume at the end of the day, which is basically the work of Central Huijin Investment Ltd. I have also previously analyzed that the national team has shifted from mainly buying Shanghai and Shenzhen 300 ETF and Shanghai 50 ETF to diversifying into buying ChiNext Index, CSI 500, and CSI 1000.

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This is actually correct. This year, the country has bought an additional four to five hundred billion yuan worth of Shanghai and Shenzhen 300 ETF and Shanghai 50 ETF, not only failing to revive the A-share market but also causing the index to approach the low point of January, successfully trapping itself. Of course, it's not entirely without results; the continuous new highs of the four major banks and the three oil companies are the work of the national team.

Why does the national team's purchase of Shanghai and Shenzhen 300, Shanghai 50, and other ETFs push up the four major banks instead of lifting the index? I have also analyzed this. The Shanghai 50 and Shanghai and Shenzhen 300 include sectors such as consumer goods, finance, pharmaceuticals, new energy, and electronics. However, consumer goods, pharmaceuticals, and new energy are heavily invested in by public and private funds and foreign capital. Foreign capital has been selling, and public funds are also selling due to redemptions by fund holders, completely offsetting the national team's purchases. In contrast, sectors like banking, oil, and electricity have little institutional position, and naturally, there is no capital to sell off, so the national team's purchases, combined with institutional herding and retail investors' chasing of highs, naturally push the four major banks to continuous new highs.

Looking at the trend of the four major banks, they have fallen by more than 10% on average in just over a week, and the three oil companies and major infrastructure stocks are even more unbearable, with some falling nearly 20%. I am very fortunate to have warned of the risks in the banking and other high dividend sectors on August 27th, and after writing, the banks began to fall, and I continued to publish articles criticizing high dividends for several consecutive days. Even the most resolute bulls would likely waver after reading my "On High Dividends," thereby reducing their positions.

For interested friends, you can refer to the article I wrote on September 4th, which provides a wonderful discussion on high dividend investment, and answers the view that "the higher the dividend rate when the stock price falls." Today, I will only briefly summarize the two main reasons for the decline of high dividend sectors such as banks in the past two weeks:Firstly, the four major banks and the three oil companies have seen too much growth this year, it could be said that aside from thematic stocks, the four major banks have experienced the most significant increase. Due to the market's lack of confidence in the domestic economy, state-owned enterprises with stable performance have a relatively low risk of default, and they also offer high dividends, which is why institutions are flocking to defensive sectors with high dividends such as banking and oil.

However, most high-dividend sectors are also cyclical sectors, and if the economy is in a downturn, they will eventually follow the cycle downward, which is the second reason.

The financial industry is the lifeblood of the real economy, and banks are the mother of all industries. A weakening domestic economy will ultimately lead to a narrowing interest spread in the banking industry and an increase in non-performing loan ratios, resulting in a decline in bank profits. The situation for resources such as oil, copper, and aluminum is even more understandable; a decline in manufacturing will inevitably lead to a decrease in resource usage.

In early August, the United States released employment data that was a bombshell, causing market concerns about a U.S. economic recession, which at the time triggered an epic crash in the Asia-Pacific stock markets. A weakening U.S. economy, combined with the well-understood domestic economic situation, represents the two most powerful economies in the world, and concerns about recession are casting a shadow over the global market. Internationally, crude oil and copper, as well as domestic iron ore and rebar, have all plummeted. Crude oil once approached $70 per barrel, iron ore fell by more than 10% in just over a week, and rebar fell by 7%.

The weakening of the economy acts like a mirror, revealing the true nature of these "high dividends" as cyclical stocks, and banks are also slowly reflecting the economic downturn, with mid-year reports also showing signs of trouble.

Equity investment is essentially the pursuit of growth; if performance declines, dividends will naturally decline as well, and the brainwashing logic of high dividends is broken. The so-called logic that "the higher the stock price drops, the higher the dividend yield" also falls apart.

Today's news is relatively quiet. The "wholly foreign-owned hospital" policy over the weekend has led to a rise in related sectors, and the concept of state-owned enterprise reform is quite strong. Last week, China Shipbuilding absorbed and merged with China Shipbuilding Heavy Industry, and Guotai Junan absorbed and merged with Haitong Securities. Over the weekend, the controlling shareholder of Xiyu Tourism became the Xinjiang State-owned Assets Supervision and Administration Commission, and Xiyu Tourism once hit the daily limit. The controlling shareholder of Salt Lake Co., Ltd. changed to China Minmetals, and Salt Lake Co., Ltd. opened with a daily limit. This may only be the beginning, and the grand play of state-owned enterprise restructuring will continue to unfold, which is expected to drive market sentiment to warm up. The bull market of the ChiNext board in 2015 was driven by mergers and acquisitions, and now mergers and acquisitions are once again encouraged, with state-owned enterprises taking the lead.

Finally, let's take a brief look at the market. As of the close, the Shanghai Composite Index fell by 1.06%, setting a new low for this stage, the ChiNext Index rose slightly by 0.06%, the Hong Kong Hang Seng Index fell by 1.60%, and the Hang Seng Technology Index fell by 1.51%, which can be considered as making up for last Friday's account. The total turnover of the two markets slightly shrank to 0.52 trillion, with more than 3,000 stocks falling.