A-Shares: Flash Crashes Are Back

iFeng: 闪崩股再现江湖,四大诱因帮你避雷
Recently, there have been a number of flash crashes. On Thursday (June 6), a number of stocks such as Debe Electric, Nanxing Equipment, Hansen Pharmaceuticals, and Fujian Dickinson hit a daily limit. Insiders said that the "flash crash" stocks were caught off guard and investors had better prevent it in advance. They should first strengthen the research on the fundamentals of the company's business, financial data and shareholders' shareholding, and treat the companies with reduced shareholders and changed performance cautiously.

Several stocks collapsed in the session.

In the afternoon of June 6, Hecheng shares collapsed and fell to a limit. The previous trading day, June 5, saw the shares collapse and fall to a limit.

In addition to the above-mentioned companies, on Thursday, Founder Motor, Contact Interaction, Tongyi Stock, Tiansheng New Material, Derivative Technology, Lingyun Stock, Longyu Fuel Oil, Jinaobo, Wutong Holding, Zhisongde, Hongbo Stock, Nongshang Environment, Jinzhi Technology, Gosbell, Antang Holding, Huamai Technology, Tianwei Video, Huaxing Venture and other shares all showed a trend of intraday "flash collapse" and decline.

Penny Stocks Appear Again

Regulators accelerated the withdrawal of listed companies with problems and scared ST shares. Investors voted with their feet one after another. Since mid-to-late May, the number of daily limit falls for theme stocks and ST stocks has remained above 30.

On June 6, the ST concept index fell 2.25% again. Of the 138 ST stocks, 106 fell and more than 30 stocks fell to their limit. Only 19 ST shares have gone red. *ST China's stock price fell below 1 yuan to close at 0.99 yuan.

December 27, 2018 is a day recorded in the history of A shares: the first "delisting of par value". As the closing price for 20 consecutive trading days was lower than the par value of the shares, zhonghong shares were eventually delisted by Shenzhen stock exchange.

On the last trading day of A shares, Zhonghong closed up 4.76% and its share price was fixed at 0.22 yuan per share, setting a record low for A shares. Investors involved suffered heavy losses.

With Zhonghong's shares withdrawing from the market at face value, the future may sound the alarm bell for listed companies with one yuan of shares. This means that the prelude to the delisting of par value has begun, and the delisting of one-dollar and two-dollar listed companies in the A-share market is expected to increase significantly in the future.

Some investors said that if the market expectation does not improve, *ST Hua Ye may be the second "delisting" stock.

Wind data shows that as of June 6, more than 50 listed companies in the A-share market had stock prices less than 2 yuan. *ST baby eagle, *ST big control, *ST Hua Xin and other shares are hovering around one yuan.

Four Factors Contribute to Causes

Judging from the flash crash of individual stocks on the 6th, they mainly have the following characteristics:

1. Before the flash crash, the stock price rose greatly, and the profit-making market concentrated on fleeing.

In the flash crash, most of the stocks were those that had increased greatly before and had not undergone any adjustment. Such as tiansheng new material. As of yesterday, the stock has risen continuously since May, with a cumulative increase of more than 50%. In addition, shares such as Huamai Technology and Tianwei Video have risen more than 20% against the trend since May.

2. For small-cap stocks with poor fundamentals, a small number of orders will cause a flash crash

Contact Interactive Stock Price to Flash, Collapse and Limit in Early Trading. The company's performance changed in 2018, with a loss of 669 million yuan, after the company's performance express said that the company would realize a net profit of 18.05 million yuan. In the first quarter, the company's net profit continued to decline, with a net profit of 31.01 million yuan in the first quarter, a year-on-year decline of 70%, and a net cash flow of-180 million yuan.

Fujian's Dickinson released its first-quarter results report on the evening of April 24, saying that during the reporting period, the net loss was 12.255 million yuan, while the profit for the same period last year was 1.649 million yuan. Operating income was 9.869 million yuan, down 61.65% from the same period last year. The basic loss per share was 0.05 yuan, while the profit for the same period last year was 0.01 yuan.

3. Shareholders reduce their shares collectively

In addition, the reduction of major shareholders is also the main trigger for the flash crash.

On the evening of May 30, Founder Electric announced that Qingdao Jinshihao Investment Co., Ltd., a 6.33% shareholder, plans to reduce its holdings by no more than 28.41 million shares, or no more than 6% of its total share capital, in the next six months. Fundamentally speaking, Founder Motors, which specializes in new energy automobile motors and controllers and micromotors, lost 444 million yuan in 2018.

Nanxing Equipment announced in the evening of June 4 that due to its own fund demand, Yang Jianlin, director, secretary of the board of directors and chief financial officer holding about 410,000 shares (accounting for 0.31% of the company's total share capital), plans to reduce the company's shares by centralized bidding within 6 months after the 15 trading days from the date of the announcement (accounting for 0.08% of the company's total share capital). Mr. He Jianwei, deputy general manager holding about 80,000 shares of the company (accounting for 0.06% of the total share capital of the company), plans to reduce the company's shares by centralized bidding within 6 months after 15 trading days from the date of disclosure of this announcement to no more than about 20,000 shares (accounting for 0.02% of the total share capital of the company).

Hansen Pharmaceuticals announced that on May 24, 2019, the company received "Notice on Reduction of Shares in Hunan Hansen Pharmaceuticals Co., Ltd." and "Brief Equity Change Report of Hunan Hansen Pharmaceuticals Co., Ltd." issued by Shanghai Fosun Pharmaceutical Industry Development Co., Ltd. ("Shanghai Fosun"). From December 26, 2018 to May 23, 2019, Shanghai Fosun reduced its shares by means of centralized competitive bidding, totaling about 952,900 shares, accounting for 0.32192% of the company's total share capital. After this reduction, Shanghai Fosun's shareholding ratio fell to 4.99997%.

4. Trust Plans Assemble

Looking through the detailed information of "flash crash" stocks, one factor that has nothing to do with performance and market is also worthy of attention, that is, many companies have multiple trust and asset management plans in the list of shareholders, and the proportion of individual shares is still quite concentrated. Such as Jin zhi technology, contact interaction, derivative technology, etc.

Flash Collapse is a Risk Education Course

Since 2017, individual stocks have continuously collapsed due to trust shareholding, high pledge and lack of liquidity. Quoting the Securities Times: "Is it not a risk education", it tells investors to always keep their heart in awe of the market.

The Securities Times published a commentary article entitled "Bad Stocks Collapse and Falling out of Market Integrity": A-share stocks continue to collapse. At the current stage of stricter supervision and gradual conversion of investment style to value investment, some stocks that deviate excessively from internal value have collapsed, which is essentially a return of value. The only choice for investors to avoid the flash crash is to conform to the market situation and uphold the value investment concept.

The Securities and Futures Commission has repeatedly said that the price of shell resources has dropped considerably compared with the previous period. The speculation of shell resources such as "small speculation" and "rotten speculation" in the market has been curbed to a certain extent and the market response has been positive. In the next step, the CSRC will continue to improve the delisting system from the perspective of protecting the interests of small and medium-sized investors based on the principle of "according to law, comprehensively and strictly" supervision and in combination with the revision of the Securities Law.

On May 11, Yi Huiman, Chairman of the China Securities Regulatory Commission, said at the 2019 annual meeting of the China Association of Listed Companies and the 7th meeting of the 2nd Board of Directors that it was necessary to explore innovative delisting methods and realize various delisting channels. For enterprises that seriously disrupt the market order and meet the delisting criteria, they should resolutely withdraw from the market and withdraw to the end. For the listed companies with frequent chaos, the focus should be on strict supervision, so as to strengthen the power of supervision and make the wrongdoers pay the price.

On May 13, on the first trading day after Chairman Yi's speech, there was one plate in the market with the most differentiated trend, namely ST plate. The front-page commentary of Securities Daily said: Chairman Yi's speech, A shares said "understood" with 42 limit ST shares.

On June 5, the website of the CSRC showed that the CSRC would continue to step up enforcement of information disclosure violations of listed companies, urging listed companies and major shareholders to tell the truth, make true accounts, speak in a timely manner, not disclose false information, not engage in insider trading, and not manipulate stock prices. Firmly hold the "four bottom lines" to ensure the construction of a standardized, transparent, open, dynamic and resilient capital market.

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