Yesterday, the share prices of BOE Technology Group Co., Ltd. (000725.SZ) fall slightly after reaching a high. Its intraday turnover reached 10.22 billion yuan, ranking top among Shanghai and Shenzhen bourses. Meanwhile, the figure was almost the aggregate turnover of the last 577 stocks.
Statistics show that capital in the market shows a trend of highly concentrated since the beginning of this year. Take yesterday as an example, the total turnover in Shanghai and Shenzhen bourses was 595.9 billion yuan, half of which were contributed by the top 268 stocks, accounting for 8.3 percent of the entire 3,241 stocks traded that day.
Less than 10 percent stocks contributed over half of the market turnover. This means that the divergence in the A-share market is intensifying. Industry insiders expect that the trend will sustain.
Market capital is highly concentrated
The change of turnover, an objective indicator for the degree of how a stock is traded actively, reflects a change of market focus, and to some degree shows the evolution of the market logic.
On November 10 2016, the total turnover in both Shanghai and Shenzhen bourses recorded 654.4 billion yuan, half of which were contributed by the top 405 stocks, accounting for 14.7 percent of the total stocks traded that day.
It can be easy to tell that in only one year, although the total market volume sees little change, the concentration of capital improved remarkably.
On the other hand, since the beginning of the year, it has been a normal that most stocks recorded an intra-day turnover of less than 100 million yuan, and some stocks even saw an intra-day turnover of several million yuan.
For example, yesterday, the number of stocks with an intra-day turnover of less than 100 million yuan in both Shanghai and Shenzhen bourses was 1951, accounting for 60.2 percent of the total stocks traded that day; while the number was 998 a year ago, accounting for 60.2 percent of the total stocks.
Based on experience of mature markets, this phenomenon may continue. Yesterday, the total turnover of the Hong Kong stock market came around 87 billion US dollars. 80 percent of the turnover was contributed by less than 6 percent stocks. The turnover of the single stock Tencent Holdings reached 6.873 billion yuan, accounting for nearly 8 percent of the total turnover that day.
Capital flows to big-cap stocks
Statistics show that active capital withdrew from most small- and medium-cap stocks to large-cap blue chips with higher liquidity. Meanwhile, as the market value of those blue chips rose due to higher share prices, they could contain more capital.
Data as of now shows that over third fourth stocks saw their average intraday turnover lower than last year. Nearly 1,200 stocks saw over a 50 percent decrease in average intraday turnover l from last year. Their average market value as of yesterday was about 9 billion yuan.
Excluding sub-new stocks, the number of stocks whose average intraday turnover this year added over 100 percent from last year was about 170, including large-cap blue chips, Ping An Insurance (Group) Company Of China, Ltd. (601318.SH) and China Merchants Bank Co., Ltd. (600036.SH). Their latest average market value exceeded 40 billion yuan.
Take ZTE Corporation (000036.SZ) as an example, the company’s turnover has repeatedly hit new highs. Its average intraday turnover was 494 million yuan last year; while its average intraday turnover this year was 1.261 billion yuan, an increase of 155 percent year on year. The average intraday turnover of China United Network Communications Limited (600050.SH) rose as high as 184 percent.
In addition to the communications industry, LCD panel leader BOE Technology Group saw its capitalization up from less than 100 million yuan at the end of last year to over 200 million yuan in less than a year. Its average intraday turnover also increased over two times from 748 million yuan last year to 2.475 billion yuan this year.
Security leader Hangzhou Hikvision Digital Technology Co., Ltd. (002415.SZ) also performed well. Since the beginning of this year, the company’s average intraday turnover was 1.056 billion yuan, up 170 percent from last year. In addition, the average intraday turnover of artificial intelligence leader Iflytek Co., Ltd. (002230.SZ) rose 2.5 times from last year.
In addition to science and technology leaders, many of automobile leaders saw a significant growth in turnover thanks to a continuing rise in new energy vehicles theme. The average intraday turnover of completed vehicle leaders SAIC Motor Corporation Limited (600104.SH) and Guangzhou Automobile Group Co., Ltd. (601238.SH), and auto part leaders Weichai Power Co., Ltd. (000238.SZ) and Huayu Automotive Systems Company Limited (600741.SH), also doubled from last year.
Capital preference changes drive by various factors
Behind the change of market data, it appears more important to explore the change of market logic. Several industry insiders told the reporter that various factors, including company performance, liquidity of individual stocks, investors structure and investment concepts, caused a tremendous change in capital distribution.
Huatai Securities Research Institute believed that the phenomenon that the market is dominated by leading stocks is enhancing.
A private fund manager based in Shanghai told reporters that his stock selection standard changed greatly from the past. In the past, he selected stocks that ranked the first 60 percent in both market value and average intraday turnover; but now he only selects those ranking in the first 35 percent in order to select stocks with higher liquidity. He believed that in addition to their valuation, higher liquidity becomes an important factor that blue chips can attract capital.
Southwest Securities chief analyst Zhu Bin said that behind the divergence in the market is the change of investor structure that dominates the A-share market. As the internationalization of the A-share market advances, the marginal power of value stocks will continuously strengthen. Huachuang Securities also believed that institutional investors are continuing to increase shareholdings in some large-cap stocks. On the whole, institutions will continue to overweight large-cap and low-valued stocks.
Translated by Coral Zhong
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