In the domestic market, stock price fluctuations are relatively significant, but the level of differentiation is not severe. The number of truly low-priced stocks remains limited. High-priced stocks are primarily found among small-cap stocks, while low-priced stocks on the main board typically fall within the 5–10 yuan range. Although low-priced stocks make up a considerable portion of the main board, their valuations are still relatively high. Small-cap stocks tend to be overvalued due to investor appetite for risk, which drives their prices upward.
Looking at the changes in low-priced stocks across different sectors, industries like steel, real estate, power equipment, and utilities have maintained a relatively high proportion of low-priced stocks. Some of these sectors have seen a passive shift from undervaluation to moderate growth, whereas in sectors such as pharmaceuticals and food and beverages, the share of low-price stocks has gradually declined, with valuations also trending downward. This is largely due to the more stable business performance in these industries.
Valuation trends show that during key market points—such as when the Shanghai Composite Index was at 998 and 1664—the percentage of stocks with a price-to-book (PB) ratio below 2 times reached 69.9% and 64.1%, respectively. However, at a higher index level of 2000, this percentage dropped to 39.4%. The market valuation structure still shows some differences, especially with small-cap stocks like those in the SME Board and GEM having relatively higher valuations compared to large-cap stocks.
Compared to developed stock markets, China’s A-share market exhibits two distinct features. First, the price differentiation in the A-share market is not very pronounced, particularly lacking a large number of absolute low-priced stocks, which contrasts sharply with the abundance of such stocks in mature markets. Second, investors in China's market tend to value companies differently based on their growth stage. In developed markets, emerging industries often trade at lower valuations despite strong performance and profitability, while traditional heavyweights command higher valuations. In contrast, in the A-share market, even if emerging industries show unstable performance, they often carry high stock prices and valuations. Meanwhile, large-cap blue-chip stocks, such as banks, may have stable earnings but are generally undervalued.
With the completion of the delisting system, improved investor protection, and the gradual rise of value-investment concepts, the market is evolving. Key changes include: first, the overall valuation level of the market is slowly declining; second, industries with stable performance, strong profitability, and higher shareholder returns—such as financial services—are expected to see improved valuations and stock prices; third, under delisting pressure, truly low-priced and highly liquid stocks will gradually increase in number; fourth, certain new economic growth sectors continue to attract investment due to sustained performance growth, keeping their valuations high, while industries entering or facing recession will face dual pressures of falling valuations and stock prices.
In the short term, the market is influenced by factors such as valuation levels and economic restructuring. Sectors like banking, financial services, household appliances, and automobiles are expected to benefit from improved market valuations and stock prices, while some niche growth industries warrant long-term attention.
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