Recently, a customer posted a text message Caitong Securities Co.Ltd(601108) sent to him “no abandonment of shares”. The text message said, “if your new shares have won the lot and the account funds are sufficient, the securities company will freeze the funds in accordance with the national regulations and shall not give up the shares”, and said that “the payment of new shares winning the lot is an obligation of shareholders”. After the fermentation of public opinion, Caitong Securities Co.Ltd(601108) quickly responded that the short message was a risk warning message sent by a business department to customers, and some of the words and expressions were not rigorous and complete. Subsequently, the company will also explain to customers.
Why does a text message cause great controversy? Because it is a normal market behavior for investors to apply for new shares, they must be based on the principle of equality and voluntariness. After winning the lottery, investors can choose to pay or abandon the purchase according to their own sense of independence. The measures for the administration of securities issuance and underwriting clearly stipulates: “offline and online investors shall pay the subscription funds in full and on time after receiving the distribution. If online investors fail to pay in full after winning the lottery three times in a row within 12 months, they shall not participate in the subscription of new shares within 6 months.”
In other words, as long as investors are willing to bear the consequences of “not participating in the subscription of new shares within 6 months”, they can choose to give up the subscription. The claim in the text message that “payment for winning the lottery of new shares is an obligation of shareholders” is biased and obviously misleading. Fortunately, the securities companies realized this problem and clarified it to the market and customers in time.
Such short messages are directly related to the recent breaking of new shares, which leads to the increase of investors’ abandonment of purchase. Recently, there has indeed been a large differentiation in the new market. Some investors even shouted “winning the lot is like winning the knife” and “winning the lot is like poisoning”, and the abandonment rate of new shares is rising day by day. According to media statistics, the number of new shares issued on the first day of listing at the end of last year accounted for less than 15% of the new shares in the current month, exceeded 20% in January and reached 35% in March. As of the 15th, nearly 60% of the new shares had been broken on the first day of listing in April.
According to the latest announcement of the issuance results, the company was abandoned by online investors for 778 million yuan, accounting for 13.38% of the total size of the issuance, and the proportion of abandoned shares reached a new high in recent ten years.
Abandoning too many purchases will undoubtedly affect the interests of securities companies. In the case of the overall downturn of the market this year, the performance of some business departments is under great pressure. Such an extraordinary move is understandable. However, I think there are still many problems exposed. As a service provider, securities companies should first consider problems in the interests of customers. If they pull the flag like this, they will only be abandoned by customers. The truth of “skin does not exist, how will Mao attach” is very simple. In the face of the same problem, other securities companies are undoubtedly wiser. On April 12, a securities firm took the initiative to warn investors before the listing of six new shares such as CNOOC and Zhongyi technology, saying that it could abandon the purchase of four of them, on the grounds that “the issue price is too high and over raised”.
The normalization of new share issuance is the result of the market mechanism in the issuance link, but there are also factors contributed by some securities companies in pursuit of high recommendation fees. The author believes that although the case of Caitong Securities Co.Ltd(601108) does not involve the conflict of customers’ interests between the company’s internal investment bank and the business department, it inspires us from one side: if the sponsor can put forward professional and reasonable valuation and pricing for new shares, and conduct in-depth investigation and understanding of investors’ expectations and affordability, can it reduce the incidence of new share breaking? Will the contradiction between securities companies and new customers be eased? This problem is worthy of serious consideration by all securities companies.
