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Our reporter Zhang Wei
The Shanghai and Shenzhen Stock Exchange recently announced new delisting regulations, and the ST sector immediately started a wave of limit drop, and some stocks have limited limit drops for many days. The new delisting regulations will reshape the investment ecology of the capital market, promote the transformation of investment concepts, change bad habits of “speculation” and consolidate the philosophy of value investing.
There are many problem and seriously losing stocks in the A-share market, and many companies have become “zombie companies.” These losing stocks and problem stocks are “sneaky”, not only seriously distorting the optimal resource allocation function of the capital market, but also causing the phenomenon of “bad money ejecting good money” from time to time. Many ST stocks have been touted for short-term hot money, and their stock prices have risen far more than prime stocks, and even more than long-term profitable low-priced stocks. The A-share market has undergone several delisting system reforms, but the problems of individual companies “dumped” into their main businesses to launder financial data and avoid delisting indicators are more prominent.
For a long time, A-share speculation, brief speculation, small speculation, new speculation, and other “four speculations” have been serious. The “four speculations” have not only caused a long-term market recession, but have also caused heavy losses to investors, which has become a major problem in the Chinese stock market. Small and midsize investors prefer to buy stocks with poor fundamentals, or even ST stocks at a loss. This has led to many underperforming companies “the more depraved, the happier,” and there is a strange market in which the share price is far out of line with fundamentals. In 2011, the price-to-book ratio of company ST’s underperforming A shares was 3.8 times, while the share prices of underperforming companies in foreign markets were at mostly close to the book value of the company, and there were even greater discounts.
One of the main reasons investors are interested in speculating on ST shares is the expectation of the company’s asset restructuring. From the exchange’s data, retail investors are mostly involved in speculation. Many retail investors blindly brag about ST stocks rather than investing value in prime stocks. In his view, the potential profitable effect of a successful ST de Bosha share restructuring is very attractive.
For example, * ST Huangtai resumed trading on December 16, and the stock abbreviation was changed to Huangtai Liquor. The share price soared 314.99% compared to before the suspension of trading in April 2019. Bo Sha * ST Huangtai has raised a lot of hedge funds, but it should be noted that it is not easy to ST’s shares “go from black chicken to phoenix”, and the number of falls into the abyss of delisting has risen significantly in recent years. Over the past three years, face value foreclosure companies have continued to emerge, and many companies have been on the brink of face value foreclosure, indicating that market-based foreclosure has started to take effect. As of early December, 9 companies, including * ST Yinge, Shengyun Environmental Protection and Tianguang Zhongmao, have been removed from the market since 2020.
In anticipation of the tightening of the foreclosure system, the phenomenon of investors “voting with their feet” for ST shares is prominent. As of the close on December 18, the top 10 A shares that have fallen since 2020 are all ST shares. Among them, * ST Global topped the list with a 91.04% drop, and the stock prices of * ST Tianxia and * ST Shida fell more than 80% during the year. Additionally, the stock prices of * ST Modern, * ST Huaxun, * ST Baling, * ST Laxia and * ST Yisheng have fallen more than 70% during the year. Among them, many stocks have fallen into “1 yuan stocks” or “penny stocks”, and there is a higher risk of delisting at face value. For example, * ST Tianxia and * ST Yisheng closed at 0.94 yuan and 0.88 yuan respectively on December 18, and their share price has been below the face value of 1 yuan for 3 consecutive business days.
China’s capital market has been established for 30 years, but the investment structure is still dominated by retail investors and there is the problem that “traders are not yet mature.” Short speculation is intertwined with bad habits such as petty speculation and short speculation, compounding losses for retail investors. The main axes of further reform of the exclusion system include: increasing market authorization, reducing the space for exclusion evasion, simplifying exclusion procedures and improving exclusion efficiency. This means that the increase in the foreclosure rate for A shares is the general trend. If investors continue to indulge in Bosha speculation, they will face greater risks. Stock selection should focus first on the fundamentals of the company. Getting back to investment value is the right way for investors to earn income.
Huatai Securities said that the advancement of the new round of delisting system reform is an important part of the structural reform on the financial supply side. The synergy of the reform of the delisting system and the registry system will help the shares To accelerate the liquidation of zombie companies and introduce more high-quality companies, To realize the survival of the fittest and guide investment of long-term value. New Era Securities analysts believe that after the foreclosure reform, market compensation is expected to increase and foreclosure efficiency will improve significantly, thus strengthening the market ecology of survival of the fittest by the publicly traded companies.
The new foreclosure regulations promote the improvement of the quality of listed companies and change the bad habit of “speculation”, which will bring positive effects to the stock market. A More and more market funds say goodbye to blind speculation and become towards investing in value and investing in the long term, which will help improve market stability and promote A-shares to say goodbye to the pattern of “short bulls and bears, dizzying ups and downs.” With the continuous improvement of the A-share investor structure, market funds focus on high-quality stocks, and the survival of the fittest will promote the stability and soundness of the stock index. As a result, it will also drive more incremental funds to pay attention to A shares and improve market liquidity.Return to Sohu to see more
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