Sign of the Bear: Zombie Stocks Return to Mainland Market as Prices Fall Below Net Assets

iFeng: A股巨变！30亿以下市值股骤增一大波僵尸股逼近

1. the market value: 3 billion or less companies surged

On August 25, 2015, there were 295 stocks with a market value of less than 3 billion, accounting for 10.64% of the total number of markets at that time; today (June 22nd), there are as many as 971 with a market capitalization of less than 3 billion, accounting for 16.47. %. What is even more interesting is that there are two ranges of proportion increase, namely 50 billion to 100 billion yuan and 100 billion yuan or more, which also means that large stocks are gaining market funds, small stocks have become funds a disaster-hit area as capital flees.

Change in market capitalization from August 2015. (That was the initial post-crash, the Shanghai Composite would make a lower-low in early 2016 (still the post-2015 low) amid the global equity market sell-off.) The left column is market capitalization in 100 million RMB. The number of large-caps has barely budged, mostly companies are falling out of the 20 to 50 billion RMB range and lower. This comports with the Chinext making a new post-2015 low last week.

The change is even more extreme from the bubble peak:

If compared with the bull market's highest point of 5178 points (June 12, 2015), this data change is even more obvious. At that time, only 184 stocks with a market value of less than RMB 5 billion accounted for only 6.70%; now the two cities have already There are 1,836 stocks whose stock market value is below 5 billion, accounting for more than 50%, which is 51.26%.

The number of stocks in the mid-cap range is also shrinking. Here's the same chart

2. P/B: nearly 40% of the stock market has a net rate of less than 1.5

On August 25, 2015, only 35 stocks with net breakout (less than 1 market share) accounted for 1.26%; today (June 22nd), as many as 191 stocks were broken, accounting for 5.41%. If the screening is based on an index with a market rate of less than 1.5, this data gap is even more pronounced, from 147 (3.3%) three years ago to 759 (21.51%) today.

An increasing number of stocks are trading below net assets.

On August 25, 2015, there were only 35 stocks that had broken through the net (less than 1 in the market), accounting for 1.26%;

On June 22, as many as 191 stocks were broken, accounting for 5.41%.

If the screening is based on an index with a market rate of less than 1.5, this data gap is even more pronounced, from 147 (3.3%) three years ago to 759 (21.51%) today.

Companies below net assets by industry:

From the perspective of industry distribution, this year's net stocks are mainly concentrated in the utilities, real estate, transportation, banking and automotive industries.

Lianxun Securities reported that the bottom-up analysis of the key net-breaking industry concluded that behind the poor performance of the stock price, there are fundamental reasons for poor earnings growth such as electricity and shipments, as well as some industry profits. The growth is good, but the stock price is still sluggish, such as bank real estate, steel and coal are more prominent. The decline in the valuation of these stocks means that the lack of market confidence reflects the suspicion of long-term sustainable growth in earnings.

3. Turnover: 20% of stocks to attract 70% of the market capital

On August 25, 2015, there were 1,513 stocks with a turnover of more than 100 million yuan on a single day, accounting for more than 50%; today (June 22nd), only 688 stocks with a turnover of more than 100 million yuan were accounted for. Less than two percent. Judging from the turnover of the two cities today, the turnover of 20% of the stocks has already taken 72% of the total transactions in the two cities.

Look at the data first:

On August 25, 2015, there were as many as 1,513 stocks with turnover exceeding RMB 100 million on a single day, accounting for more than 50%;

On June 22, there were only 688 stocks whose turnover exceeded 100 million yuan, accounting for less than 20%.

On August 25, 2015, there were only 51 stocks with transactions below 10 million on a single day, accounting for 1.84%;

On June 22, there were 426 stocks with turnover below 10 million, accounting for 12.07%.

Judging from the turnover of the two cities today, the total turnover was RMB 299.3 billion. There were a total of 688 transactions with a turnover of more than RMB 100 million per day, accounting for 19.5% of the total turnover. The cumulative turnover of these 688 stocks was RMB 215.159 billion, accounting for 72 transactions today. %. This means that 20% of stocks have attracted 70% of the market capital.

In the context of the continuing differentiation in the amount of transactions, some institutional investors have also been forced to choose more liquid stocks, which has led to the continued increase in the market for differentiation, and the differentiation trend has added to the market's hedging options. Now the market is experiencing Similar negative cycle.

Xu Xin, an Essence Securities official pointed out that apart from the cyclical factors, some long-term structural factors cannot be ignored. Measures such as the interconnection of stock markets and the incorporation of internationalization measures such as MSCI have, to a certain extent, changed the structure of investors. The preferences of these investors have led to the concentration of funds to a small number of companies that they prefer.

A-share internationalization, a large wave of zombies are approaching

On November 17, 2014, the Shanghai-Hong Kong Stock Connect was formally opened, and the Shanghai Stock Exchange and Hong Kong stocks were interconnected. On December 5, 2016, Shenzhen-Hong Kong Stock Connect was formally launched. Since then, the A-shares and the Hong Kong stocks formally opened; on June 1, 2018, A The stock is officially included in the MSCI index. A stock has stepped into the international market step by step, and it is even more attractive to attract foreign investment. Data show that more than 160 billion yuan of funds have flowed into the A-share market through the land-port-to-net exchange this year. With the continuous influx of foreign capital, the market style of A-shares is inevitable. Will change with it.

Investors familiar with the Hong Kong stock market know that the Hong Kong stock market not only has a large number of penny stocks, but at the same time the big blue-chip stock will receive a premium, and the small-cap stocks will remain unmoved for a long time due to the low turnover. More importantly, this phenomenon is one of the performances of the international mature stock market.

For the Hong Kong stock market in 2017, it was a bull market. The HSI soared 36%. However, in the bull market, investors need to know: In 2017, nearly 60% of Hong Kong stocks fell. Over 80% of the stocks underperformed the HSI. Nearly 200 stocks fell more than 50%. The same is true for the US stock market, with nearly half of the stocks falling in 2017.

At this time, there may be A shares of partners wonder: Is not the general stock market can be called a bull market?

In simple terms, the mature stock market bull market is mainly caused by the improvement of regional economy or company fundamentals. Basic knowledge can also tell that there is no improvement in the fundamentals of all companies. Therefore, in a mature market, There is no bull market.

In the fundamental aspect of the company, the leading enterprises of the industry have overcome the industry's small companies in terms of market share, financial strength, and talent advantages. Therefore, at the time of economic recovery, the leading companies in the industry will take the lead in recovery and squeeze small companies in the industry. This is also why, in the mature stock market, leading companies in an industry are more likely to enjoy high valuation premiums.

In addition, there is a fact in the Hong Kong stock market that a considerable portion of stocks has no volume at all. Pick your stock today, such as:

Only one deal a day!

Here are two HK stocks, first has 1 trade in the day, the other 2.

When investors buy such stocks, they have to wait patiently for the next player to enter. In many cases, it is not the receiving party. Such stocks may be referred to simply as "zombie stocks."

At present, the A-share market is also experiencing this trend, and a large wave of "zombie shares" will also come. As mentioned above, with the number below 3,000, there were only 51 stocks whose daily trading volume was less than 10 million three years ago. Today, the turnover of 426 stocks is less than 10 million yuan, and the turnover of 73 stocks is less than 5 million.

According to brokerage Chinese reporters, some investment agencies have clearly stipulated that they are not allowed to buy stocks whose daily trading volume is less than a certain value, and this will worsen the liquidity of some stocks. Insufficient liquidity means more costs are required to sell, which will further weaken its appeal to large funds. The valuation of such stocks will also be discounted due to lack of liquidity, and the market value will continue to shrink.

The bottom is coming.