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Don't forget the lessons from the past and be alert to the risk of "frying new products"

2019-07-24 17:11
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Don't forget the lessons from the past and be alert to the risk of "frying new products"
----- From the website of Shenzhen Stock Exchange
Recently, with the gradual warming of the stock market and the demonstration effect of BYD's listing, the phenomenon of new stock speculation has increased. On July 6, new GEM shareholders Bao Sheng, Guan Hao Bio and Fei Lida were listed on the first day of the market because of the large fluctuation of their stock prices. Many temporary suspensions in the market suggested risks. Among them, the shares of Dongbao Bio and Guanhao Bio rose by 200% and 166.60% respectively compared with the issuance price on the same day. The following three trading days, Dongbao Bio and Guanhao Bio share prices were increased by 200% and 166.60% respectively. They all fell sharply, by more than 20%. At present, the pricing of the primary market is becoming more rational, the P/E ratio of issuance has dropped significantly, and the first day of listing of new shares has a certain rise, which has its reasonable side. However, history shows that neglecting the fundamentals of listed companies and the valuation analysis opinions of professional institutions, excessive participation in new stock speculation, blindly follow the trend of "new speculation", the ultimate result is a high-level hold-up, heavy losses.
Don't forget the lessons of history, blindly pursuing heights is very injurious.
Since the reform of the new stock issuance system, the market-oriented pricing mechanism has made the issuance pricing more in line with the secondary market price. Since this year, the breakdown of new shares in Shenzhen Stock Exchange has been common. More than 70% of new shares have fallen below the issuance price. Blind follow-up speculation of new stocks, especially those with a "dumb" mentality to catch up with the first day's higher growth rate, needs to bear the huge risk of a sharp fall in prices. Practical cases and empirical studies fully verify that blind pursuit of high results is very "injured". On November 23, 2010, the first day of the listing of Fuling mustard tuber was over-hyped. On that day, the stock opened at 25.12 yuan, and its intraday share price rose to 48 yuan, up 243.10% from the issuance price. Then it fell and stopped for two consecutive trading days. As of July 11, 2011, its intraday share price dropped to 17.42 yuan, down 63% from the first day's highest price. .71%. Investors who chased higher on the first day were almost all "locked up", with investors who bought more than 35 yuan losing as much as 99%. According to statistics, since the resumption of new stock issuance in 2009, the first day of Shenzhen Stock Exchange rose by more than 150%, one month after the stock price fell by 75%, an average decline of 27%, three months after 93.75%, an average decline of 28%. From the empirical results of Shenzhen Stock Exchange Financial Innovation Laboratory, 528 new stocks were listed on SMEs and GEM from October 30, 2009 to June 30, 2011. The investors who bought on the first day had a loss of 61.23% on the fifth day after listing. Among them, 20% of the new stocks (106) bought on the first day had a loss of 100% and 54% on the fifth day after listing. Investors who bought 285 new shares on the first day lost more than 90% after five days.
Fully Understand the Transaction Rules and Be Wary of the Risk of Following the Way of "Stir-frying New"
In January 2011, the Shenzhen Stock Exchange revised the "Trading Rules" and made two major adjustments in the first day trading monitoring and risk control system. One is to unify the temporary suspension thresholds in the first day of listing of new stocks on the SME and GEM, and to clarify the risk control of stocks without price increase or decrease on the first day of listing. The second is to modify the system of suspension of two-stage and three-stage in small and medium-sized boards, which is consistent with the GEM, that is, when the increase or decrease in the market reaches or exceeds 20% and 50%, each temporary suspension lasts 30 minutes, and when it reaches 80%, the temporary suspension reaches 14:57. Shenzhen Stock Exchange has implemented a key monitoring on the first day of listing. When abnormal fluctuations or excessive speculation occur in the stock market, it will temporarily suspend the trading according to relevant rules. Its purpose is to warn the trading risk, calm the overheated atmosphere and warn the abnormal behavior. Some investors ignore the risk of "speculating in the new market", blindly follow the trend of "blog fool", and suffer heavy losses. Statistics show that among the investors who participated in the first day trading of Dongbao Biology, Guanhao Biology and Feida, the proportion of individual investors buying shares was 99.42%, 96.94% and 98.10%, respectively. Among them, 92.93%, 92.18% and 93.98% of the individual investors who bought less than 5000 shares. From the first suspension of Dongbao Biology and Guanhao Biology to the second suspension, the losses of investors who chased higher purchases reached 92.40% and 82.79%, respectively. Therefore, investors participating in the trading on the first day of stock listing must timely understand the market risk situation, calm thinking, prudent trading, and avoid unnecessary losses.
Grasp the Fundamentals of Listed Companies and Invest in New Stocks Rationally
No matter how the stock price rises sharply in the short term, the speculation of new shares divorced from the fundamentals of listed companies will always be constrained by its intrinsic value, and eventually return to rational valuation. The first day of listing of Zhonggong International, Tuobang Electronics, Chuanrun Stock, Fuling Brassica chinensis and other stocks, and the subsequent sharp decline prove this point. The valuation and market pricing of new shares are influenced by many factors, such as company performance, net assets, growth, industry positioning and market conditions. Investors should carefully read the prospectus, announcements and reports of listed companies, and take advantage of the opportunity to participate in the "road show" of listed companies to obtain the most direct and reliable information, based on which the company's operating performance, industry characteristics, development prospects and potential risks are analyzed. If investors have less access to information or limited professional analysis ability, it would be wise to refer to the valuation and pricing analysis of new stock listing by professional institutions.