Xun Yugen: The long-term return of stocks is higher than other assets, with an annualized return of about 8-10%.

Golden Finance reported that on June 29, Xun Yugen, chief economist of Guoxin Securities, stated that a century of global experience shows that the long-term returns of stocks are higher than other assets, with an annualized return rate of around 8-10%. Looking at the long-term returns of major asset classes in China, from 2005 to 2025, the annualized returns of the Wind All A and CSI 300 (both considering dividends) were 10.6% and 9.9%, respectively; real estate (considering rent) had an annualized return of 8.3%; commodities represented by the CRB spot index had an annualized return of 4.8%; and bonds measured by the China Bond Government Bond Total Index had an annualized return of 4.3%.

The level of stock market returns depends on fundamentals. At the macro level, the annualized returns of stock markets in various countries are positively correlated with GDP growth. At the micro level, stock market returns are mainly contributed by the profits and dividends of listed companies. Taking the stock markets of China and the United States as examples, the long-term returns and ROE of their major indices are basically converging. For instance, the annualized return of the S&P 500 Total Return Index from 1960 to 2025 was 10.7%, with a median ROE of 13.1% over the same period; the annualized return of the CSI 300 Total Return Index from 2005 to 2025 was 9.9%, with a median ROE of 12.6%.

Comparing with historical long-term return levels, the current return of the CSI 300 is relatively low, while the S&P 500, ChiNext Index, and STAR 50 are relatively high. Among them, the annualized return of the ChiNext Index since 2019 has reached 18.4%, significantly higher than its annualized return of 9.7% since 2010 and its net profit compound growth rate of 13.9%. By sector, real estate, non-bank finance, pharmaceuticals, and food & beverages are low, while electronics and telecommunications are high.