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"Zombie stocks" appear and disappear in a large area, and liquidity pressure funds to "stick together"

2018-01-04

"Zombie stocks" appear and disappear in a large area, and liquidity pressure funds to "stick together"
First Finance 2017-12-26 10:16
Guo Luqing

On the B side of the A-share structural market, "zombie stocks" began to emerge in large areas.

Since December, some individual stocks have had liquidity problems, and the trading volume has dropped sharply, even in the case of more than 10 minutes of sideways trading. The intraday trading has also stagnated for several times, just like the "zombie stocks" in the overseas market, no one paid attention to them for a while.

The sharp decline in trading volume has also become apparent in recent days. Wind statistics show that since the beginning of December, as of December 25, the number of individual shares with an average daily turnover of less than 10 million has gradually increased. Since December, as of December 25, there are 137 individual shares with an average daily turnover of less than 10 million, and 759 individual shares with an average daily turnover of less than 20 million.

A number of fund managers interviewed pointed out that this phenomenon can be regarded as a feature of the internationalization of A-shares, and it is also the general trend of the development of the domestic capital market. It also means that institutional investors are bound to pay more attention to the liquidity of individual stocks, and the phenomenon of "holding together" may be greatly reduced.

"Zombie stocks" appear in large areas

"I expect that there will be more and more 'zombie stocks' in China, and the investment philosophy and methods of institutions will gradually integrate with the international mature capital market, which is a historical trend of the development of the domestic capital market." Fan Jihao, Investment Director of Guangdong Fulida Asset Management Co., Ltd.

Since December, some stocks have had liquidity problems, with a sharp decline in trading volume and even a situation of more than 10 minutes of sideways trading. The intraday trading has also stalled for several times, just like the "zombie stocks" in the overseas market, no one paid attention to them for a while.

The so-called "zombie stocks" refer to stocks that have been trading sideways for a long period of time without rising or falling. There may be some seemingly good stocks in the stock market, but their performance is like a zombie.

For example, on December 13, Ningbo Jingda (603088. SH) did not make a deal for half an hour in the middle of the session, but it turned into a level one word in time. The total turnover of the day was only 3.11 million, and the turnover rate was 0.09%; On the following December 14, from 11:4 a.m. to 11:14 a.m., Ningbo Jingda traded sideways at 41.49 yuan for about 10 minutes, and traded 8.5 million yuan throughout the day, with a turnover rate of only 0.26%.

Wind statistics show that since the market fell in mid November, the number of individual shares with an average daily turnover of less than 10 million has gradually increased. As of December 25, there are 137 individual shares with an average daily turnover of less than 10 million and 759 individual shares with an average daily turnover of less than 20 million. On November 1, only 93 A shares had a turnover of less than 10 million yuan, and by November 30, they had increased to 263.

On December 25, the Shanghai Composite Index fell 0.5% to close at 3280.46, while the GEM Index fell 1.32% to close at 1755.81. There were 217 individual shares with trading volume less than 10 million (excluding new shares and word boards) in Shanghai and Shenzhen Stock Exchanges on that day.

As of the latest data, among 759 stocks with an average daily turnover of less than 20 million, 726 of them have a market value of less than 10 billion, and 37 have a market value of less than 2 billion. Among them, the total market value of Tianlong Optoelectronics (300029. SZ) is the smallest, only 1.504 billion yuan. The common features of these stocks are that their market value is small, their performance is poor and their valuation is high.

Fan Jihao believes that the interconnection strategy of Shanghai Hong Kong Stock Connect, Shenzhen Hong Kong Stock Connect, Shanghai Stock Connect, Shenzhen Stock Connect and so on will gradually connect the mature capital markets of the mainland and Hong Kong, enable mainland investors to gradually contact and understand the rules and investment philosophy of the international mature capital market, and focus on large enterprises with excellent investment performance, which is also one of the reasons for the low turnover of some small and medium-sized stocks.

"The second is the strict supervision, resulting in no opportunity for market manipulation and other illegal acts. Since 2017, the CSRC has strictly governed the market, issuing more than 200" tickets "in total, with fines and confiscations of more than 7 billion yuan. Some stocks are highly controlled by market funds. In view of the strict supervision, manipulation cannot be achieved, resulting in low trading volume." Fan Jihao said.

First Finance also noted that the issuing speed and number of new shares have significantly accelerated in the past two years, setting multiple records since the domestic stock market. In 2016, a total of 247 A-share IPOs were issued in 23 batches. In 2017, a total of 436 A-share IPOs were expected to be issued, with a total of 683 new shares in two years. The increase of a large number of new shares has reduced the attention of individual shares, resulting in low turnover of some individual shares, forming a "zombie stock" situation.

Consider individual stock liquidity

"It's good for the market to pay attention to 'zombie stocks'.' zombie stocks' are the norm in developed countries (regions). Not only Hong Kong stocks, Taiwan stocks, but also in European markets, the daily turnover of many stocks is very small, which is also an important feature of the internationalization of A-shares. When the market begins to attach importance to the liquidity of the equity subject matter of investment, it will give a certain premium to actively traded stocks." On the 25th, an investment director of public funds in Beijing told First Finance.

Since this year, there has been a significant outflow of funds from small cap stocks. Individual stocks with low turnover have emerged. On the B side, blue chip white horse stocks have absorbed a large number of institutional funds, showing a continuous rise. This is also an important feature of institutional funds dominating the market.

This feature is also increasingly closer to the characteristics of mature overseas markets.

In recent years, A-shares have experienced serious structural differentiation, and the overall performance of blue chip stocks with high performance in large market has significantly exceeded that of stocks with small and medium market capitalization. If you just look at the comprehensive index covering the whole market, you will have the illusion that the performance of A-shares this year is not good, but the fact is that, as the market has seen, it is a structural market.

From this perspective, there is a certain degree of "distortion" in the A-share Shanghai Composite Index.

"If we look at the Shanghai Stock Exchange 50 Index or the Xinhua A50 Index (blue chip stocks covering Shanghai and Shenzhen), in fact, this year's performance of A-shares is not inferior to that of major global stock market indexes, but has won." Zhu Xiaojun, president of Huaxin Capital (Hong Kong) said.

One of the characteristics of this situation is that the larger the market value of the company, the higher the institutional shareholding ratio, while the smaller the market value of the company, the smaller the institutional shareholding ratio. Similarly, the lower the valuation, the higher the institutional shareholding ratio. The higher the valuation, the lower the institutional shareholding ratio.

"In terms of investment, we will require a certain balance in liquidity. Since last year, we have monitored the liquidity of each fund product. When your position exceeds a certain proportion of the turnover in the past 6-7 days, we will require an adjustment. If you are optimistic about the fundamentals of a stock, we think that the future is to slowly allocate shareholding, instead of buying 2 or 3 points a day as before, and quickly fill the position." The investment director of the above-mentioned Beijing public fund said to China First Finance.

At the same time, the internationalization of A shares is also reflected in that the attitude of foreign investors towards A shares this year must gradually change to a positive direction. On the one hand, because China's economy has stabilized and rebounded, foreign investors' overly pessimistic expectations of China's economy have been repaired; On the other hand, the continuous emergence of high-quality blue chip companies in A-shares has also increased foreign interest in A-shares.

"In terms of investor structure, institutional investors account for a relatively high proportion in the relatively mature overseas stock market, while retail investors still account for a relatively high proportion in the current A-share market. But it is precisely because A-share is undergoing the process of leading by retail investors to the increasing proportion of various institutional investors that the differentiation of individual shares this year is so obvious." Zhu Xiaojun further said.

"I think (prefer big blue chips) The formation of this situation is not style change, but result adjustment. Similarly, this road will not turn back, which is a great change. The market is pushing forward, and looking back is likely to suffer losses. Of course, it does not mean that small stocks cannot be invested, but for institutional investors, future equity investment will pay more attention to liquidity, especially for large public fund companies. Once they hold shares in a centralized manner, they will face risks, price fluctuations will be more severe, and they will suffer greater losses. " The investment director of the above-mentioned Beijing public fund also believes that.
(Statement: This article is an internal view of the company, and does not represent an investment proposal to buy or sell stocks)

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