The B-share index suddenly fell today, causing the A-share index to follow suit. In intraday trading, the B-share index fell to 197.86 points, the lowest since July 2012, with the biggest intraday drop of more than 7%. As of press time, the B-share index fell 6.26% to 199.77.

In terms of individual stocks, basically fell sharply across the board, with more than 10 shares such as Danke B, Green Court B, Guoxin B and Yunsai B falling by the daily limit, while Haixin B, chlor-alkali B, Jinlun B and other stocks fell more than 9%.

1. The first pure B share with face value delisted will appear

Dongfang B issued an announcement on May 10 that the company's shares had closed below the face value of RMB 1 per share for 20 consecutive trading days. According to the relevant provisions of the Stock listing rules of the Shenzhen Stock Exchange, the trading of the company's shares will be suspended from the opening of the market on May 11, and the Shenzhen Stock Exchange will make a decision on whether to terminate the listing of the company's shares within 15 trading days from the suspension. This means that Dongfang B may become the second share delisted at face value after ST Ruodian this year, and it is also the first pure B share to be delisted at face value. The analysis shows that the gem registration system will be implemented one after another, thus accelerating the devaluation of shell resources.

In fact, B-share is a "problem left over from history". At the beginning, the B-share market was established to reserve foreign exchange funds, but now that foreign exchange reserves are sufficient, the significance of B-share is getting weaker and weaker. In the history of B-share, "B-to-H" has been tried to solve the remaining institutional problems, but due to currency conversion, weak profitability of B-share companies, and difficult to meet the requirements for H-share listing, "B-to-H" has not been successful.

Guoxin Securities believes that the smooth operation of the Shanghai-Hong Kong Stock Connect provides reference experience, and with the gradual landing of the registration system and the Shenzhen-Hong Kong Stock Connect, the future reform of the B-share market is imperative.

2. The B-share market is illiquid.

Compared with A-shares, the low activity and illiquidity of B-share market may also be one of the reasons for the sharp fall. Even when the B-share index plummeted today, the turnover was only more than 200 million yuan, while the total market capitalization of B-share constituent shares exceeded 280 billion yuan, with a turnover rate of less than 0.1%.

3. The market is worried about the situation of foreign trade

In April, the world's major economic system manufacturing PMI generally declined, Europe and the United States in the second quarter of the economic downward pressure, institutions in the next few months, foreign demand still faces downside risks. However, as the growth of the epidemic in Europe and the United States has entered a plateau, the growth rate of the number of people diagnosed by COVID-19 in the world has slowed down, and Europe and the United States have also begun to resume work and return to production. Although the pace of returning to work may face twists and turns and there is great uncertainty, it may be developing in a good direction at the margin.

In response to the return of export growth in April, Donghai Securities believes that it is not due to the improvement in external demand, but mainly due to the gradual release of the backlog of orders and the increase in exports of epidemic-related products, which led to higher-than-expected export growth in April.

Donghai Securities pointed out that at present, most developed countries, such as Europe and the United States, have entered a period of stability of the epidemic, and some countries have gradually resumed work, but with reference to China's experience, it may take 1-2 months to start and fully resume work. External demand may still be weak in the short term, and a correction in export growth in April may not be sustainable.

What is the impact on A-shares?

What does the rapid decline of B-shares mean for A-shares? Generally speaking, it means the release of worry, but such release is not necessarily a leading indicator of decline for A stock market, but may be an indicator of market bottoming out.

Great Wall Securities believes that at present, with the disclosure of the first quarterly report, the economic data in May have not yet been released, and the two sessions will be held soon, which is in a policy and economic vacuum. The current market sentiment will improve with the gradual control of the epidemic at home and abroad, economic data and performance data will usher in a V-shaped reversal and a gradual recovery of deep valuation adjustment, but policy expectations and repair expectations need to be treated more cautiously. The market needs a new higher than expected to usher in a new round of upside. The current market is likely to be in a period of shock, so it is recommended to pay attention to the industries with less impact on the industrial chain in the second quarter, new and old infrastructure related to domestic demand boost, liquor faucets and other industries with high bearing.

Open source securities said that both internal and external recovery are certain, but because the slope is unknown and the possibility of secondary risk factors for overseas outbreaks has not been reduced, it is difficult to have systematic opportunities on the broad-based index. It is suggested that investors should grasp the three main lines of "uncertainty revaluation": first, driven by the sustained recovery of offline consumption, the recovery of economic activity and the stimulation of consumption policy structure, spirits, home appliances and cars will deduce the repair logic of pricing molecules. Second, the undervalued implied long-term low growth expectations and short-term deterministic growth mismatch of construction, building materials; fundamentals obviously bottomed out, the subsequent step-by-step improvement of petrochemical. Finally, the growth plate can be gradually distributed to domestic demand-led sectors (semiconductors, cloud computing).