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Market index fell accumulated 10.22% ever since May 8th. This has effectively offset the gains market achieved earlier this year with most of the stocks are in deep retreat. Statistics show that a total of 1812 stocks posted drops since May 8th which account for 74.75% of the total domestic stocks. In another word, since May 8th, 3 stocks out of every 4 posted loss. This is a clear indicator of the breath of the domestic stock adjustment.
As a matter of fact, not only the breath of the stock price adjustment is broad, but the extent of the price adjustment is deep. A total of 307 stocks posted loss over 20% since May 8th which is 12.67% of the total domestic stocks. On the contrast, only 88 stocks posted gains over 20% which is only 3.63% of the total stocks. Analysts have indicated that bad financial performance has been driving the stock price slide.
It is worth mentioning that 46% of the mining stocks posted drops over 20% since May 8th. Such large quantity of the mining stocks post deep adjustments at the same is a phenomenon by itself. Analysts believe that while demand is weak and imported coal volume has been growing significantly, cola price has been on the downward spiral recently. This has confined any upward attempts by the mining stocks and given rise to a group stock price dive.
As stock price falls, the market value of many companies ended up to be lower than their net asset values. As of July 5th, 49 stocks in 2nd tier market have dropped below their net asset values.
Among them, 15 stocks are in the industry of transportation which is the sector with most below the net asset value stocks. Ferrous metal industry posted the most such stocks as Anyang Steel, An Steel and Huaning Steel have P/Es of 0.55, 0.57 and 0.57 respectively. This is equivalent of selling the enterprise net assets half price which rarely happens in the market. In addition, Bank of Communications and SPD bank posted their most recent P/E of 0.99 which is another embarrassment to the financial industry.
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