As the core foundation for the survival and development of securities market, the mature investors with reasonable structure is crucial to the safe operation and functioning of the capital market. The current emerging and transitional capital market in China develops rapidly and changes greatly. Due to multiple factors like social culture, investment habits and psychological bias, some small and medium-sized investors believe "rumors" and pay attention to "themes" and such market phenomena as new shares speculation, small-cap stocks speculation, underperformed stocks speculation and frequent trading are longstanding. Therefore, Chairman Guo Shuqing of the China Securities Regulatory Commission (CSRC) said to the small and medium-sized investors at the forum in Guangdong Province that such serious phenomena as new shares speculation, small-cap stocks speculation and underperformed stocks speculation in the securities market have not only led to the irrational stock price structure, but also harmed investors' interests. As a result of unceasing speculation after new shares' listing, the investors participating in the new shares speculation suffered great losses.
Aiming at investors' irrational investment behavior of new shares speculation, it is a must to tighten the crackdown pertinently, perfect the construction of relevant systems, drive IPO pricing back to earth, and develop and establish the investor team with rational investment concepts. With the issuance of the "Guidance Opinion on Further Deepening Reform of New Share Issuance System", focusing on the goal of "promoting all market participants to fulfill their respective duties, reflecting real corporate values through new share prices, realizing the coordinated and sound development of the primary and secondary markets and protecting the legal rights and interests of investors", a new round of reform in the new share issuance system has been formally launched. Under the above backdrop, according to the united deployment of the CSRC, with a goal of guiding the rational investment of small and medium-sized investors by urging them to study and grasp new shares, from April this year, the Shanghai Stock Exchange (SSE) has carried out the serial work related to the IPO simulated price inquiry activity for small and medium-sized investors in response to the reform of the new share issuance system. All this aimed to strengthen the investor education related to new shares and elevate investors' abilities in the rational participation.
Get well-prepared for guiding the rational participation of investors in the new share investment
In order to give full play to the major role of IPO simulated price inquiry activity in guiding small and medium-sized investors to form correct investment concepts for new shares, the SSE activated relevant business departments including those related to issuance and listing, investor education and website technology development for establishing special working teams to study and formulate the working scheme. Moreover, by soliciting opinions from investment bank divisions of securities companies such as Shenyin & Wanguo Securities, Guotai Jun'an Securities Co., Ltd. and CITIC Construction & Investment Securities Co., Ltd., the SSE formulated the final activity scheme based on the full discussion and research.
After confirmation of the scheme, the SSE set about all preparations for the IPO simulated price inquiry activity immediately. Besides, the SSE developed the SSE's IPO Simulated Price Inquiry Platform for Small and Medium-sized Investors (http://ipo.sseinfo.com/) within only two weeks, thus ensuring the timely implementation of the activity. Noticeably, at each stage of the scheme design, the SSE highlighted the orientation of guiding the rational participation of small and medium-sized investors in the new share investment, including requiring investors to read the "IPO Prospectus" carefully before price inquiry, setting questions about companies' relevant information before price inquiry, providing P/E ratios for investors for reference, and opening the special column for the investor education related to new shares, in a bid to guide investors to learn, compare and study.
Earnestly implementing for jointly strengthening the investor education related to new shares
In allusion to the serious irrational investment such as new shares speculation in the current market, the SSE has been focusing on strengthening the investor education related to new shares since the implementation of the initial activity.
On one hand, the SSE made great efforts to improve the efficiency in the investor education related to new shares by innovating working manners. Since the launch of the activity, the SSE led securities companies and investors to better know the rules and significance of price inquiry quickly by continuously innovating working manners and organizing the shooting of relevant educational video clips. Besides, the SSE organized some active investors in the price inquiry activity to attend the promotion meetings for IPO road shows, with an aim of helping investors better understand the new shares' issuance and pricing procedures for new shares. Furthermore, the SSE also invited senior industry researchers of securities companies to explain the valuation method of new shares, important points in the industry analysis and investing-value analysis to investors, helping them to learn the skills of industry analysis and rationally judge the intrinsic value of new shares.
On the other hand, the SSE, along with securities companies, jointly promoted the investor education related to new shares. In the process of launching the activity, the SSE called up securities companies to go all out for the education, namely, requiring securities companies to guide investors for serious study on new shares and rational participation in quotations for new shares by on-the-spot interpretation, video and other ways. Meanwhile, the notice issued by the SSE required securities companies to give full play to their frontline role in serving investors and constantly toughening the education via their business departments nationwide.
Promoting the suitability management on investors of new shares by timely summary
Since the first domestic simulated price inquiry activity, centering on the guideline of "soliciting opinions from the market in time, summing up the correct working experience and constantly optimized the activity procedures", the SSE gradually improved and optimized its working manners and further exerted the supporting function of the simulated price inquiry activity in deepening investor education and protection.
An SSE official said, "When launching the activity, we found that investors' participation in the simulated price inquiry activity currently was highlighted by distinct behaviors as follows: firstly, investors' quotations were prudent. In the several IPO simulated price inquiry activities held previously, most orders of investors were between RMB5 and RMB15; secondly, on the whole, there existed great differences in the investors' valuation towards new shares. Small and retail investors favored low quotations, while the investors with larger assets scale preferred higher quotes on average; thirdly, the quotations of elder investors were more prudent. In addition, upon analysis on the price inquiry data, we also found some problems. For example, some investors' quotations were random to some extent as price inquiry data showed that some investors had abnormal quotations. Upon data comparison, it showed that there still existed deviation between investors' quotations and real issuance prices. According to the above analytical results, the SSE is actively studying and taking measures for the purpose of accomplishing the activity."
There have been 6 rounds of IPO simulated price inquiry activities so far. 8 news shares in Beijing Cuiwei Tower Co., Ltd., ZheJiang AoKang Shoes Co., Ltd., Sichuan Star Cable Co., Ltd., Epoxy Base Electronic Material Corporation Limited, Jiangsu Sunrain Solar Energy Co., Ltd., CTS International Logistics Corporation Limited, China Automotive Engineering Research Institute Co., Ltd. and Bros Eastern Co., Ltd. and 14,300 person-times have participated in the simulated price inquiries, with the average participation rate up to 90%. These activities have been widely acknowledged by all market participants including investors and securities companies.
In the future, on the basis of consistently leading investors to rationally participate in the new share investment, the SSE will enrich the activity contents by constantly innovating the forms of the investor education related to new shares, broaden the coverage of the activity by optimizing the selection of the investors participating in the quotation, and better realize the function of the activity in educating the investors of new shares by strengthening the supervision on securities companies' activity organization and investor education related to new shares and fully exerting their functions as the front keynote and terminal medium.
In addition, with the successive launch of simulated price inquiry activities of new shares, the SSE is taking measures to require securities companies to strengthen the investor education related to new shares and the suitability management on investors of new shares. Meanwhile, in order to further implement relevant requirements in the "Guidance Opinion on Further Deepening Reform of New Share Issuance System", the SSE requires securities companies to follow relevant requirements of the suitability management on investors and strengthen the suitability management on customers purchasing new shares on the basis of formulating self-regulatory rules of the suitability
FTSE Mondo Visione Exchanges Index:
Shanghai Stock Exchange Enhances Abilities Of Small And Medium-Sized Investors In Rational Investment By Constantly Reinforcing Investor Education Related To New Shares
Date 27/06/2012