As the A-share market oscillates downward, more and more listed companies have joined the "net-breaking army."

China Business News statistics found that as of October 23, the stock prices of 423 stocks in the Shanghai and Shenzhen stock exchanges had fallen below the net assets per share (excluding cases with negative price-to-book ratios, the same below), which was more than the 346 stocks in early October.

There are 77 companies, and the number is close to the historical peak in late April 2022.

Among them, the real estate and banking sectors are the hardest-hit areas with net losses. 42 listed banks have all broken net, accounting for 100%; 53 listed real estate companies have broken net, accounting for nearly 49%.

In this regard, Hu Yu, chief economist of Xinding Fund, told China Business News that at the bottom of every bear market, you can basically see that the proportion of stocks that broke the net and broke stocks reached extreme values.

"The number of net-breaking stocks is close to the historical peak and the number of sub-new stocks has increased significantly, which can be regarded as an important signal that the market has bottomed out." He said.

Bottom signal?

Looking back at several important bottoms in the history of A-shares, the number and proportion of net-breaking stocks will increase significantly in most cases.

For example, on June 6, 2005, the Shanghai Composite Index reached its lowest point of 998.23 points. On that day, the number of net-breaking stocks reached 164. At that time, there were only 1,214 listed companies in the Shanghai and Shenzhen stock exchanges, so the proportion reached 14%.

Similarly, on October 28, 2008, June 25, 2013, January 27, 2016, January 4, 2019, and April 27, 2022, the Shanghai Composite Index hit its lowest levels of 1664.93 points, 1849.65 points, and 2638.3

At the historical lows of 2440.91 points, 2863.65 points, 165, 150, 54, 364 and 455 stocks respectively broke through the net, accounting for 11%, 6%, 2%, 11% and 10 respectively.

%.

At the two highest points of the Shanghai Composite Index on October 16, 2007 and June 12, 2015, the number of net-breaking stocks in the entire market was 0. On October 23, the Shanghai Composite Index reached its lowest point of 2923.51 points, and the number of net-breaking stocks

Reaching 423, accounting for 8%, the number is close to 455 on April 27, 2022.

"The signal of the number of net-breaking stocks is very effective, and historical data has been verified many times. At the same time, from the perspective of value investment, according to multiple factors such as stock-bond income ratio, net-breaking ratio, broken stock ratio and the long-term trend line of the Shanghai Stock Exchange Index,

Comprehensive comparison shows that the winning rate of this historical bottom signal is very high," Hu Yu said.

Behind the continued expansion of net-breaking shares is the fact that the valuation of A-shares has reached the bottom range.

The PE (price-to-earnings ratio) of the Shanghai Composite Index is only 12.6 times, the PE of the Shenzhen Component Index is 20.8 times, the PE of the CSI 300 is 11.0 times, the PE of the GEM Index is 27.4 times, and the PE of the Science and Technology Innovation 50 is 37.4 times.

These two major industries have become the "hardest hit areas". According to the distribution of listed sectors, among the 423 stocks with net-breaking stocks, 407 are on the main board, forming the main body of stocks with net-breaking stocks; in addition, there are 11 GEM stocks, and the Science and Technology Innovation Board

There are only 5 of them.

From the perspective of industry distribution, according to Shenwan's first-level industry classification, real estate and banks are the "hardest hit areas" for net-breaking stocks. Among them, the number of net-breaking stocks in the real estate industry reached 53, accounting for nearly 49%. Among them, 6

The stock market net ratio is even less than 0.4 times.

Wanhe Securities believes that at present, real estate sales and development investment are still weak, and the financial situation of real estate companies has not yet improved. Against the background of a greater relaxation of real estate policies, the data is lower than market expectations.

Next is the banking industry. Today, all 42 listed banks have achieved net bankruptcy, with a net bankruptcy rate of 100%. The lowest price-to-book ratio is 0.3 times for Minsheng Bank, and the highest is 0.96 times for Bank of Ningbo.

According to the interim report, in the first half of this year, the 42 A-share listed banks achieved a total operating income of 2.95 trillion yuan, a year-on-year increase of only 0.5%, and a total attributable net profit of 1.09 trillion yuan.

It is worth noting that among the 42 A-share listed banks, 40 have narrowed their net interest margins.

Cinda Securities believes that the current net interest margin of commercial banks is at a historically low level. The central bank clearly stated in the column of the monetary policy implementation report that commercial banks need to maintain reasonable profits and net interest margins. In the future, under the protection of policies such as lowering deposit interest rates, banks’ net interest margins will

Interest rate pressure is expected to be controllable.

In addition, 35 and 34 stocks in the transportation and construction decoration industries respectively broke through the net, ranking first in terms of number.

Generally speaking, current net-breaking stocks are mainly concentrated in traditional industries.

However, some emerging industries have also seen more net-breaking stocks. For example, in the pharmaceutical and biological industry, 21 stocks have broken net, accounting for more than 4%.

In fact, some of the net-breaking stocks have performed well, which deviates from the stock price performance. For example, among the 423 net-breaking stocks, 40 stocks’ attributable net profit in the first half of this year has more than doubled year-on-year, especially some

Financial stocks. Previously, Ping An executives of China publicly declared at the interim results conference that the stock price was seriously undervalued.