On November 8, 2018, the Shenzhen Stock Exchange made the decision to terminate the listing of Sinohong shares in accordance with the provisions of the Rules for Stock Listing and the audit opinions of the Listing Committee. The company became the first company to be forced to terminate its listing because its share price was below par value for 20 consecutive trading days, thus opening the prelude to denomination delisting.
After entering August 2019, two stocks have touched the red line of denomination delisting. One is nailed on the board and the other is sitting on the verdict. One Yuan stock has bid farewell to the A-share market one after another.
This years accelerated denomination delisting is a good phenomenon. The underlying reason is that Chinas securities market has been governed and standardized by law. Stocks with lower denomination for 20 consecutive trading days have been ruthlessly abandoned by investors, and the delisting risk of stocks whose performance has fallen sharply has increased. Wang Huamin, an expert in financial research and investment and deputy director of the Finance Committee of the China Market Society, told the Economic Observer.
At the same time, the acceleration of denomination delisting has also brought about changes in the concept of A-share institutional investors and individual investors. According to the results of private placement network survey, 77.78% of private placements believe that with the market maturing gradually, part of the investment logic is changing. Without studying the fundamentals of speculation on low-price stocks, they will face huge risk of stepping on lightning. Under the normalization of delisting and strict supervision, the logic of low-price as king will gradually cease to exist. Only by returning to the source of value investment can we avoid the risk of delisting.
On the evening of August 19, * ST Eagle announced the termination of the listing of the companys shares. On that day, the Shenzhen Stock Exchange decided to terminate the listing of the companys shares and entered the delisting period from August 27, 2019. The period of delisting consolidation is 30 trading days, and the next trading day after the expiration of the period of delisting consolidation, the Shenzhen Stock Exchange will delist the companys shares.
Publicly available information shows that Eagle Farming and Animal Husbandry was listed on the Shenzhen Stock Exchange on September 15, 2010, and was praised as the first share of pig raising in China by the industry. Before the debt crisis broke out, it was also a key leading enterprise in the country of agricultural industrialization.
Nevertheless, on June 14, 2018, more than 80% of the financial institutions of Eagle Farming and Animal Husbandry Cooperation announced that the loan expired earlier, which became the beginning of the Eagle Farming and Animal Husbandry Debt Crisis. In November, the companys ultra-short-term bond 18 Eagle Farming and Animal Husbandry SCP001 defaulted. Eagle Farming and Animal Husbandry issued a notice saying that it would pay deferred interest on products such as company ham and ecological meat gift box, which became a money debt meat repayment anecdote of A shares. By the end of 2018, * ST Eagles overdue debt had reached 3.149 billion yuan.
According to the announcement released by * ST Eagle on July 9, the companys overdue debt is increasing, with an additional overdue debt of nearly 300 million yuan. On July 29, * ST Eagle responded to Shenzhen Stock Exchanges letter of concern. Influenced by many factors, the companys cash flow is tight, and the companys loans, loans and other payments can not be repaid on time. In the end, * ST Eagle is doomed to withdraw from the market and its share price is fixed at 0.69 yuan.
Similarly, * ST Huaxin, which is a hard nut to crack with * ST Eagle, also has a serious financial crisis.
ST Huaxin, once the capital target of A-share market, closed at 44.08 yuan on June 12, 2015, but now it is at the critical moment of denomination delisting.
In this regard, Wang Huamin told reporters, Compared with other delisting companies, denomination delisting companies mainly suffer from a sharp decline in their performance. Performance-poor stocks will return to normal value, and it is impossible for them to speculate as abnormally as in the past.
Chen Jihao, partner of Beijing Gaoxi Asset Management Co., Ltd., said that normalization of denomination delisting is good for the stock market, which is the real reaction of market-oriented means.
Chen Jihao said that the delisting system is different from the previous one and more market-oriented. Especially with the advance of the registration system of the Kechuang board, the future motherboard will be like the Kechuang board, and the delisting will be normalized. Investment is not gambling, but also from the companys fundamentals to understand. In fact, many listed companiesperformance thunderbolt is a precursor, which can avoid the occurrence of thunderbolt. However, small and medium-sized investors have the disadvantage of asymmetric information, lack of professional understanding of financial data, and speculative speculation in the pursuit of thematic concepts in investment, which is easy to fall into the trap. Chen Jihao said, Therefore, it is better to be cautious about companies that do not have performance support based on thematic concepts, especially those with negative reports. Investment still needs to return to the source of value investment in order to avoid the risk of delisting.
De-listing of Thunder Stocks at Nominal Value
Open data show that by the end of the first quarter of this year, the number of shareholders of * ST Eagle reached 184,200 households, and * ST Huaxin nearly 811,000 households. As the first denominated delisting stock, as of delisting, the number of shareholders in Zhonghong is as high as 274,500.
It can be seen that hundreds of thousands of retail investors have trampled on the thunder and become a group of investors directly impacted.
According to statistics, by the end of August 22, 67 shares in A-share market had fallen below 2 yuan, including * ST Dachao (600747.SH) 0.95 yuan, * ST Huaye (600240.SH) 0.97 yuan and * ST Yinji (002143.SZ) 0.95 yuan.
Among the three delisting potential stocks, as of the end of the first quarter of this year, * ST China still has 72,400 shareholders and * ST India has 36,500 shareholders. According to the semi-annual report released by * ST, the number of shareholders of the company has decreased by 1390 in the first half of the year, but there are still 629,000.
As the first capped film and television media company this year, * ST Printing has nearly stagnated, and many financing bills have defaulted, even the annual auditor has said that it is unable to confirm the results of the operation. In the first quarter of this year, after a loss of 1786.0955 million yuan in net returns to the mother in 2018, net returns to the mother in * ST Printing lost another 2871 million yuan, and finally, the company fell below its face value for the first time on August 15.
In addition, * ST Huayes stock price had been below par value for 14 consecutive trading days, and finally returned to the 1 yuan mark on the 15th trading day, temporarily lifting the crisis of denomination delisting. However, in the past two months, its stock price has been fluctuating repeatedly around 1 yuan, and triggered the termination of early warning many times.
On the evening of August 8, * ST Huaye announced that the stock had closed at a low par value for 10 consecutive trading days and issued its first risk alert announcement that it might be terminated. On August 13, the stock price rebounded briefly to 1 yuan, and on August 22, it fell back to 0.97 yuan.
In view of the potential risk of denomination delisting, there are still so many investors willing to speculate in such low-priced stocks as * ST. The reason for this is the common sense of luck among investors. Many investors have the illusion that sparrows become phoenix. Wang Huamin pointed out that at the same time, in the past, the number of delisting stocks was small, and the delisting mechanism was imperfect, imperfect and not easy to delist.
Liu Youhua, a researcher of private placement network, said that in the past, there has been a tradition of speculating in junk stocks in A-share market. Even some organizations have made statistics, buying the 50 stocks with the lowest share price, and gaining much more than the market. The reason is that people are betting on shelling and restructuring. After all, shell resources are scarce.
Liu Zhenghua said, The logic of buying low-priced shares is actually a speculative behavior in which the delisting system of A shares was imperfect, the shell value was high and the restructuring was struggling. At present, the premise of this logic is changing. I feel that in the future, the risk of trampling lightning without studying the fundamentals is enormous by purchasing low-price stocks.
Fang Rui, the head of Shanghai Wusheng Investment Management Partnership, believes that the logic of low price is king will gradually disappear. The premise of crow to phoenix is that the fundamentals of enterprises will change substantially. If the fundamentals of a company have not changed substantially, then crow will never change into phoenix. Its not easy.
Reflections on delisting reform
After entering 2019, the forms of delisting of listed companies are more diverse, illegal delisting, denomination delisting, active delisting, reorganization delisting and so on. Publicly available data show that if * ST Huaxin is included, the number of A-share delisting companies will increase to 10 this year, a new high in recent years.
On May 11, Chairman Yi Huiman of the Securities Regulatory Commission attended the annual meeting of the Association of Listed Companies of China in 2019, pointing out that enterprises that seriously disturb the market order and touch the delisting criteria should resolutely delist, and promote the timely liquidation of zombie enterprises and shell companies. Several companies have been suspended from listing, which has released strong policy signals. From this years trend, regulators are likely to be interested in promoting poor performance delisting, which will make outstanding performance stocks recognized by investors and hold them in the medium and long term. On the contrary, less interest in buying or holding poor performance stocks will help Chinas stock market to invest more maturely. Wang Huamin explained.
Liu Youhua believes that in recent years, supervision has been improving the delisting system, and the denomination delisting system has enriched the delisting standard of the market to a certain extent. Eliminating unqualified listed companies can promote the flow of resources from inefficient and inferior enterprises to efficient and high-quality enterprises, and keep the market fresh and vigorous. The purpose of delisting system is to control the overall quality of the securities market by introducing new dynamic adjustments. The denomination delisting is only the beginning, and more and more delisting standards will be issued in the future. Liu Youhua said. The implementation of the registration system and delisting system reflects that the securities market of our country is reforming in the direction ofwide entry and wide exit. Although the reform ofwide entry and wide exitcan remove falsehoods and preserve essence, it can precipitate high-quality listed companies in the securities market, but in the process of expelling inferior currencies, the protection of the rights and interests of small and medium-sized investors is becoming increasingly serious. Wang Zhibin, a lawyer at Shanghai Minglun Law Firm, told the Economic Observer. As far as I know, the securities law currently being revised is seeking breakthroughs in three aspects: registration system, delisting system and protection of investorsrights and interests, which are also the cornerstones of Chinas securities market in the future.
Wang Huamin emphasized that stock delisting is a complete ecosystem, which requires a unified understanding and joint efforts of all parties in the market. By giving full play to the role of market restraint mechanism, guiding the return of market valuation and giving full play to the function of market resource allocation, we can form a virtuous circle of having access, having access, and eliminating the fittest. In addition, we need to study and explore innovative ways of delisting. Delisting is not an action, but a coherent process. After delisting, it involves how to compensate shareholders and other issues. The relevant legal procedures need to be improved urgently. Therefore, to explore innovative delisting methods, we should first design the procedures well and consider thoroughly. Delisting from the market should be resolutely and strictly, but judicial remedies for violations of laws and regulations should also follow suit. We can consider extracting part of the administrative fine or settlement fund as compensation fund to solve the problem of the incapacity of the relevant responsible persons to compensate after the small and medium-sized investors win the lawsuit. Wang Huamin said. Source of this article: Author of Economic Observation Network: Responsible Editor of Monday Fan: Zhong Qiming_NF5619
Wang Huamin emphasized that stock delisting is a complete ecosystem, which requires a unified understanding and joint efforts of all parties in the market. By giving full play to the role of market restraint mechanism, guiding the return of market valuation and giving full play to the function of market resource allocation, we can form a virtuous circle of having access, having access, and eliminating the fittest. In addition, we need to study and explore innovative ways of delisting. Delisting is not an action, but a coherent process. After delisting, it involves how to compensate shareholders and other issues. The relevant legal procedures need to be improved urgently. Therefore, to explore innovative delisting methods, we should first design the procedures well and consider thoroughly. Delisting from the market should be resolutely and strictly, but judicial remedies for violations of laws and regulations should also follow suit. We can consider extracting part of the administrative fine or settlement fund as compensation fund to solve the problem of the incapacity of the relevant responsible persons to compensate after the small and medium-sized investors win the lawsuit. Wang Huamin said.