IPO New Normal: Policy Logic And Market Effect

China's stock market frequently "suspends IPO" and closes the primary market at will.

According to statistics, in the past 26 years, the A share market has been closed for 9 times, of which the longest closing time is 15 months. The total closing time of the first tier market is 5 and a half years. This is the only and wonderful thing in the world, and it is also the highest performance of inefficiency and inefficiency in the market.

In the era of registration, investors will learn to think independently and make prudent decisions, and consciously abide by rational investment, value investment and away from garbage. They will understand the importance of voting with feet, consciously reduce the frequency of short frying and extend the shareholding period, which will be the new era of China's stock market.

Only registered system can save A shares and save investors!

All along, whenever the stock market falls sharply, the SFC will use executive orders to close the primary market. Once the stock market goes well, the SFC will order "restart IPO".

This is not only a direct and excessive intervention in the stock market, but also a more serious and worse consequence: it has formed strong market expectations and over reliance.

As long as the stock market falls sharply, shareholders will force the SFC to "suspend the IPO" with one voice. Otherwise, they will threaten, abuse and attack themselves.

Even if they understand that the market will be closed after the closure of the primary market, they will be able to deceive themselves and consolate themselves.

However, once the primary market is closed, in order to "restart IPO", the SFC will be shocked and tread on thin ice. When it does not know when to restart IPO, it will not be opposed or abused by the shareholders.

Is this a rogue in China's stock market, or is the regulator self serving?

"Suspension of IPO" is the first creation and masterpiece of the A share market.

It is a typical excessive administrative intervention to close the primary market at will.

In fact, no stock market in the world, no matter the developed market or the backward market, will not close the primary market lightly.

However, it is gratifying to note that since chairman Liu Shiyu took office in 2016, he broke the old pattern of IPO rhythm and stock index ups and downs for the first time, and made

Rhythm normalization, which is what I call "IPO new normal".

Accordingly, it can be concluded that the old era of "A suspension" of IPO shares has ended, which means that the "suspension of IPO" will completely withdraw from the historical stage of China's stock market.

A shares IPO new normal, in fact, is the expansion of IPO and stock index ups and downs cut, no longer tied up, its policy logic can generally be summarized as follows:

(1) open the IPO gate, block the "buy the shell" back door, and get through the withdrawal channel.

Listing is difficult and delisting is more difficult, which has been criticized by the market.

Because the listing is difficult, it is more difficult to withdraw from the market; the reason for the difficulty is the difficulty of listing.

This is a causal relationship that can not be reversed.

A queues generally require two or three years for IPO approval, and if they catch up with IPO again, the result will be even worse.

Such a IPO system will not only form IPO blockage, IPO barrier lake, but also destroy all the excellent enterprises that are growing up.

In order to deal with the long queue and high risk of IPO, some shrewd enterprises (including some purse companies) try to avoid supervision and plot supervision arbitrage. They buy junk stocks with the possibility of delisting by means of private placement and buy shell listing, but they can earn a lot of money. Therefore, junk stocks have become delicious food and hot commodities. Junk stocks can not only be decently marketed, but also be severely fried by the market, which seriously distorts the stock price signals, causing the stock market to lose the "survival of the fittest" and the allocation of resources.

Therefore, if we want to let the junk stocks go out of the market, we must solve the problem of IPO queue and dammed lake.

Only by solving the problem of "difficulty in listing" will it be possible for the "delisting difficulty" to be solved.

In other words, only "listing easy" can bring the "delisting easier", which is the so-called "big in and out".

For example, in the mid 1990s, the number of IPO in the US stock market per year was more than 1000, and the number of IPO was significantly higher than the number of delisting. However, in the late 90s, the number of Stock Withdrawal began to exceed IPO per year.

On the one hand, the expansion of IPO speed up normalization will help to solve the IPO barrier lake. On the other hand, it can greatly shorten the queue time of IPO, improve the efficiency of IPO, reduce the cost of IPO, and guide excellent enterprises to enter the IPO gate and close the rear door.

When the shell of the junk stock is not asked, investors will naturally vote with their feet.

Declines.

(two) fully satisfy the huge demand of investors for new and new speculation and serve the real economy.

The huge demand for new and new speculation by investors is mainly reflected in two sets of data: first, the rate of signing new shares is extremely low, which is even more difficult than the lottery in Liuhe. In recent years, the success rate of new shares purchase is only a few thousandths, and the supply of new shares can not meet the huge demand of investors. Second, the first day of new stock listing is "second stop" (44%), and the majority of new shares must be linked to more than 10 trading boards (10%). Once the IPO has been launched, 30 trading boards have been pulled up.

In fact, even the fool knows: behind the blind and new frenzied speculation, there is a huge difference in the one or two tier market: when the average price earnings ratio of the gem is 80 times, the IPO price earnings ratio is not allowed to exceed 23 times, which is the huge difference in the one or two level market created by people. This is also the real reason why investors want to make the new shares price in one breath.

Therefore, IPO expansion and speed up, first, we can fully meet the huge demand for investors to fight new and new speculation. Two, we can better introduce social capital into the real economy and support the prosperity of industry.

It can be expected that when IPO expands to a certain level, the success rate of new stock purchase will be raised from ten thousand to several thousand points, or even to several percent, which will greatly satisfy the investors' new demand.

At the same time, the expansion of IPO will also make the speculation of new shares gradually cool down. After the IPO, the number of trading boards will be reduced from more than 10 to 5, which is a good effect.

When all the new shares are reduced to two or three within the limit, the IPO expansion rate can be moderated moderately.

This also means that the difference between the one or two tier market has narrowed to a reasonable state.

(three) IPO expansion of small and medium-sized enterprises is conducive to balancing supply and demand and resolving small cap bubbles.

In the case of large cap stocks unmanned, although the market index stagflation, but small and medium-sized stocks speculation is rampant, stock prices rose very fierce, many stock prices have exceeded 6000 points, most of the stock bubble.

Although the index bear market is still at present, it does not hinder the speculation of stocks. This is the so-called structural bubble market.

By the end of Wednesday, up to 1296 stocks with a P / E ratio of up to 100%, accounting for more than 1/3 of all A shares, is a very frightening data.

More than 2000 shares with a P / E ratio of more than 50 times, accounting for all

2/3.

Is this the big structural bubble under the so-called "index bear market"?

When most investors stare at the big index stocks and lose money, a large number of organizations and cattle do not have to pay attention to the market index at all. Instead, they rush to stir up small and medium-sized stocks, frantically boost their stock price and gain huge profits from it.

This is the structural bubble market: most retail investors who stare at big market indexes are mostly losing money. On the contrary, investors who ignore the rise and fall of stock index are involved in scrambled stocks.

The stock market index stagflation, the reason why stocks are so frothy is: investors prefer small speculation, new speculation, bad speculation, and big blue chips and large cap stocks are abandoned by speculators. Therefore, the only way to dissolve small cap stocks bubbles is to accelerate the IPO of small businesses, especially to expand the IPO scale of small and medium sized enterprises and growth enterprise market, thereby balancing supply and demand and resolving small cap bubbles.

It can be expected that when the small cap IPO expands to a certain extent, the average price earnings ratio of the gem will drop from 80 times to 50 times, indicating that investors are becoming rational and the market supply and demand has been greatly improved.

(four) the normalization of IPO expansion reflects the inclusiveness of the market, and is also an important demand for registration reform.

Registration system is the most direct embodiment of marketization and rule of law reform.

The implementation of the registration system will mean that the A share market will become more inclusive and open, and the primary market will be "de administrative". The SFC will get rid of the "substantive examination and approval" miscellaneous business. It will focus more on market supervision and more effectively crack down on securities illegal activities. The stock exchange will independently establish IPO standards and delisting standards, and be responsible for IPO substantive auditing and delisting approval independently, and the results of the audit will be submitted to the SFC.

However, the inclusiveness and openness of the registration system will surely bring about a big opening up of the A share market, which is inevitable.

Because IPO efficiency has increased, IPO costs have been reduced, IPO has become no longer mysterious or unattainable. By that time, IPO will drop in value. Many enterprises may take the initiative to make cheap IPO, for example, the issuing price of 2 yuan or 3 yuan, which is also the inevitable result of the inclusion of registration system.

The amount of IPO raised by a company in the past may be shared by more companies in the future.

For example, under the old system, a company's IPO fundraising may be as high as 2 billion. In the future, a company's IPO fundraising may be only two or three hundred million. That is to say, under the framework of IPO registration system, more small businesses can share IPO opportunities, rather than oligospermia elite enterprises monopolize IPO rights.

As early as 2003, the total number of Listed Companies in India's two largest stock exchanges exceeded 6500. In 1997, the total number of Listed Companies in the three major stock exchanges of the United States (main board NYSE, medium and small board AMEX, gem NASDAQ) was close to 9500.

By the end of 2016, China's A share listed companies exceeded 3000 for the first time.

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