2021, as the opening year of the 14th five year plan, is a key year for deepening the reform of China’s capital market. This year, the pilot of the registration system achieved important phased results, and the reform achieved the expected objectives; This year, the capital market ushered in the third national stock exchange – Beijing stock exchange, which further completed the “big puzzle” of China’s multi-level capital market; This year, the IPO market achieved a “simultaneous increase in quantity and quality”, 522 companies went public successfully, and the initial fund-raising reached 542.654 billion yuan, a year-on-year increase of 12.92%; This year, the number of individual investors in China’s capital market exceeded 190 million, and the protection of investors reached a new level; This year, the main board of Shenzhen Stock Exchange merged with the small and medium-sized board, forming a new development pattern of mutual complementarity between different plates; In this year, the CSRC and local securities regulatory bureaus issued 321 administrative punishment decisions, further reflecting the gradual improvement of the basic system construction of China’s capital market, the continuous upgrading of the supply of the rule of law, and the further implementation of the “zero tolerance” attitude at the operational level… Generally speaking, the capital market handed in an excellent report card in 2021.
522 IPO companies raised more than 542.6 billion yuan
In 2021, the registration system reform entered the “deep water area”, and the multi-level capital market system was further improved. The registration system of the science and innovation board and the gem operated with high quality, the Beijing Stock Exchange opened the market, and the number of A-share IPOs and fund-raising reached a record high. At the same time, the regulators strictly controlled the “entrance”, and made efforts to improve the quality of information phi, improve the issuance and underwriting mechanism, and compact the responsibilities of intermediaries, so as to realize the “simultaneous improvement of quantity and quality” in the IPO market.
According to statistics, in 2021, a total of 522 companies completed IPO listing (excluding China Jianneng, which merged with Gezhouba, and huilv ecology, which re listed), with a year-on-year increase of 20%, and the initial fund-raising amount reached 542.654 billion yuan, a year-on-year increase of 12.92%.
From the perspective of industry (Shenwan industry 2021), the IPO fund-raising amount of pharmaceutical, biological, electronic, mechanical equipment and communication industries is relatively high, all exceeding 50 billion yuan, 88.912 billion yuan, 57.626 billion yuan, 53.903 billion yuan and 50.624 billion yuan respectively; In terms of sectors, 402 new listed companies were added on the science and innovation board, the gem and the Beijing stock exchange, accounting for 77.01% of the number of new listed companies with a shares, and the total initial fund-raising was 357.924 billion yuan, accounting for 65.96% of the initial fund-raising amount of a shares; From the IPO fund-raising amount of a single company, the average initial fund-raising amount of 522 companies was 1.04 billion yuan, a year-on-year decrease of 5.9%, of which 397 companies had an initial fund-raising amount of less than 1 billion yuan, accounting for 76.05%.
Under the registration system, the IPO audit port moves forward. At the same time, the supervision strictly controls the “entrance” to improve the quality of listed companies from the source. In 2021, the CSRC revised the guidelines for the evaluation of the scientific and creative attributes of the scientific and creative board, strengthened the verification of the shareholders of the enterprises to be IPO, continued to carry out on-site inspection on the initial enterprises, improved the quality of the IPO prospectus, urged the intermediaries to improve the practice quality and return to their duties.
According to the statistics on the websites of the CSRC and the Shanghai and Shenzhen Stock Exchange, in 2021, 239 IPO projects took the initiative to withdraw orders and failed to pass the audit. Among them, 29 failed to pass the audit, and 13, 8 and 8 on the main board, science and innovation board and gem respectively; 210 orders were cancelled actively, and 34 orders, 73 orders and 103 orders were cancelled on the main board, Kechuang board and gem respectively (including failure to reply within the specified time limit).
Issue pricing is an important part of corporate IPO, which directly affects the issuer’s value and financing scale. In view of the fact that some offline investors focus on strategy rather than research, and in order to be shortlisted for “group bidding”, the CSRC further optimized the IPO underwriting system of the registration system, issued new regulations on IPO underwriting in September 2021, and improved the business rules related to IPO pricing on the science and innovation board and the gem.
After the implementation of the new regulations, the effective quotation range of IPO inquiry under the registration system has increased, the proportion of shortlisted investors has decreased, and more and more companies\’ IPO prices exceed the “lower of the four”. On the whole, the pricing of new shares is more reasonable, the situation of “group quotation” has been significantly improved, and the marketization of IPO pricing has been significantly improved.
In addition, in order to support the return of high-quality red chip enterprises, regulators continue to optimize policy arrangements. In September 2021, the CSRC expanded the pilot scope of red chip enterprises listed in China, and the pilot industry scope was expanded from 7 to 14. At the same time, red chip enterprises with national strategic significance apply to be included in the pilot, which are not subject to industry restrictions.
For example, in August 2021, the CSRC accepted the application of red chip enterprise China Mobile for listing on the main board of Shanghai Stock Exchange. Subsequently, on December 13, the CSRC approved the IPO application of China Mobile; On December 27, China Mobile disclosed the results of its initial public offering. The industry believes that China Mobile’s “return to a” has set an example for the return of red chip enterprises. In the future, with the continuous improvement of policies, the “return to a” of red chip enterprises will become a trend.
insurance work has reached a new level, and an all-round and three-dimensional insurance pattern has been formed
In 2021, the important position of capital market investors will be further revealed and consolidated. This year, the number of individual investors in China’s capital market exceeded 190 million, and investor protection has also reached a new level.
Investors are the foundation of the development of capital market. “Respect investors, fear investors and protect investors” is a major theme of regulatory work. On March 1, 2020, the new securities law was implemented. The securities market established a protection mechanism with the participation of regulators, listed companies, intermediaries and investors, and a three-dimensional investor protection pattern was gradually formed.
Looking back on 2021, many landmark events were born in the protection of investors in the capital market. Among them, the first practice of representative litigation is particularly concerned. On November 12, 2021, Guangzhou intermediate people’s Court of Guangdong Province made the first instance judgment of the lawsuit of Kangmei pharmaceutical’s special representative, and Kangmei pharmaceutical and relevant responsible persons compensated 52000 investors with 2.459 billion yuan. Subsequently, on November 26, Kangmei pharmaceutical announced that the intermediate people’s Court of Jieyang City, Guangdong Province ruled to approve the reorganization plan. For investors’ claims in Securities Misrepresentation class action cases, the part of claims less than 500000 yuan will be paid off in full cash; The excess will be paid off in cash, debt with shares, trust usufruct, etc.
The successful conclusion of the above cases in a short time has greatly improved the “sense of gain” of investors, highlighted the popularity of supervision, and formed a strong deterrent to serious financial fraud and illegal acts in the capital market.
There is also a breakthrough practice in the ordinary representative litigation of securities disputes. The successful handling of the investor defendant Shanghai Feilo Acoustics Co.Ltd(600651) misrepresentation dispute case provides a reproducible sample for the promotion of the securities class action system; A “zero breakthrough” has also been achieved in the field of civil compensation for market manipulation. In January 2021, the Sichuan Provincial Higher People’s court filed the country’s first civil compensation support lawsuit for market manipulation filed by the Investment Service Center (the plaintiff Yang v. Que and other cases made a judgment of second instance, rejected the appeal request of the defendant of first instance and upheld the original judgment), This is a powerful echo and vivid practice of the second paragraph of Article 55 of the new securities law that “if the manipulation of the securities market causes losses to investors, they shall be liable for compensation according to law”.
In addition, the protection of investors is also reflected in improving the governance level of listed companies. The case of Shanghai Dzh Limited(601519) suing the actual controller Zhang Changhong and other five people for damaging the interests of the company was officially accepted by the Shanghai financial court, the shareholder subrogation litigation of the first insurance institution in China was effective, and the protection of investors gradually changed from regulations to formal implementation; As an insurance institution, CSI small and medium-sized Investor Service Center launched the public collection of shareholders’ voting rights for the first time, making small and medium-sized investors gradually become an important driving force for optimizing corporate governance.
If the rule of law prospers, the market prospers, and if the rule of law is strong, the market is strong. As an important part of the capital market ecology, protecting investors is to optimize the capital market ecology and promote the positive circulation of the market. Yi Huiman, chairman of China Securities Regulatory Commission, said that in 2022, we will “comprehensively deepen the reform and opening up of the capital market under the guidance of the reform of the registration system”. Strengthening investor protection is the basis of the registration system reform. Without investors\’ trust and confidence in the market, there will be no healthy development and prosperity of the capital market.
Investor protection is a long-term and systematic work. To create a standardized, transparent, open, dynamic and resilient capital market, regulators have both words and deeds. Many “firsts” in the insurance field in 2021 will lay a solid foundation for investor protection in the future.
the small and medium-sized boards of Shenzhen main board merged smoothly, with simple plate structure and clearer positioning
On April 6, 2021, the main board of Shenzhen Stock Exchange was officially merged with the small and medium-sized board. Three enterprises such as Zhejiang Truelove Vogue Co.Ltd(003041) , Shandongsino-Agriunitedbiotechnologyco.Ltd(003042) , Suzhou Huaya Intelligence Technology Co.Ltd(003043) issued shares for the first time and were listed on the main board of Shenzhen Stock Exchange. The merger of the main board and the small and medium-sized board is conducive to optimizing the plate structure of the Shenzhen Stock Exchange, forming a development pattern in which the main board and the gem focus on each other and complement each other, better meeting the financing needs of enterprises at different development stages and enhancing the service function of the Shenzhen Stock Exchange.
As an important part of China’s multi-level capital market system, small and medium-sized board has played an important role in optimizing economic structure, transforming growth momentum and building a modern economic system. Since its establishment, the small and medium-sized board has been located in the internal plate of the main board and operated under the framework of the main board system. After 16 years of development, the listed companies on the small and medium-sized board have continued to grow and converge with the main board in terms of market value, performance and trading characteristics. The Shenzhen Stock Exchange has generally realized the basic unification of the business rules of the main board and the small and medium-sized board, and preliminarily constructed a concise and efficient self regulatory rule system for listed companies with the listing rules as the core, the standardized operation guidelines, the industry and special business information disclosure guidelines as the backbone and the handling guidelines as the supplement. It can be seen that the merger of the “two boards” is natural.
As for the merger, there are also some concerns in the market that the valuation, issuance and listing, investment and financing services of listed companies will be affected. However, from the operation of more than half a year after the merger, this concern has obviously been eliminated. As of December 31, 2021, the total share capital of 2578 listed companies on Shenzhen Stock Exchange was 2.45 trillion shares, with a total market value of 39.64 trillion yuan, an increase of 7.01% and 15.93% respectively over the same period of the previous year; The SME composite index closed at 14530.72, with a cumulative increase of 14.17%; The SME 100 index closed at 9985.74, with a cumulative increase of 4.62%.
In terms of details, the merger revolves around the overall arrangement of “two unification and four invariance”. Among them, “two unification” refers to the unification of the business rules of the main board and the small and medium-sized board and the unified operation and supervision mode; “Four invariants” means that the conditions for issuance and listing remain unchanged, the investor threshold remains unchanged, the trading mechanism remains unchanged, and the securities code and abbreviation remain unchanged. The merger only makes adaptive adjustments to some business rules, market products, technical systems, issuance and listing arrangements, and generally has little impact on market operation and investor transactions.
On the whole, after the merger of the main board of Shenzhen Stock Exchange and the small and medium-sized board, the overall operation is stable, providing clearer and powerful financial support for small and medium-sized enterprises. After the merger, the Shenzhen Stock Exchange has formed a market pattern with the main board and gem as the main body. The main board of Shenzhen Stock Exchange focuses on supporting the financing development of relatively mature enterprises, making them better and stronger, and the issuance and listing threshold remains unchanged; The gem mainly serves high-tech enterprises and growth innovation and entrepreneurship enterprises, highlighting “three innovations” and “four innovations”. Shenzhen market has simpler structure, clearer characteristics and clearer positioning. It can provide financing services for enterprises at different development stages and different types, further improve the vitality and toughness of the capital market, better serve the innovation driven development strategy, and help lead high-quality development with innovation.
the securities regulatory system issued 321 fines and accelerated the construction of a multi-level accountability system
2021, which has just passed, is not only the beginning of the 14th five year plan, but also a key year for the further implementation of the new securities law. As regulators continue to emphasize “zero tolerance” for violations of laws and regulations in the capital market, a number of major and important cases have been investigated and dealt with one after another. On the whole, “dare not violate, cannot violate and do not want to violate” has increasingly become the consensus of all participants.
By combing the information disclosed on the official websites of the CSRC and local securities regulatory bureaus, it is found that in 2021, the CSRC and local securities regulatory bureaus issued 321 administrative punishment decisions. At the same time, a number of typical cases that have attracted much attention from the market have been sentenced one after another.
In September, the higher people’s Court of Zhejiang Province made a judgment of second instance upholding the original judgment on the first lawsuit of ordinary representative in China (Wuyang debt case); In October, the first instance of Shanghai No. 1 Intermediate People’s court sentenced beibadao group to a fine of 300 million yuan for manipulating the securities market; In November, the intermediate people’s Court of Foshan City, Guangdong Province publicly sentenced 12 people, including Ma Xingtian, former chairman and general manager of Kangmei pharmaceutical, for manipulating the securities market. Among them, Ma Xingtian was sentenced to fixed-term imprisonment of 12 years and fined 1.2 million yuan. Five independent directors were also required to bear joint and several liability of hundreds of millions of yuan, which made all parties in the market feel the “zero tolerance” of the regulators.
Taking the Kangmei pharmaceutical case as an example, with the falling weight of the first instance of the case, the sky high price ticket issued for the independent directors of the listed company has a significant deterrent to their words and deeds. It can also be seen that with the gradual improvement of the basic system construction of China’s capital market, the continuous upgrading of the supply of the rule of law, and the implementation of the “zero tolerance” attitude at the operational level, it further reflects the ability and determination of the regulatory authorities to strictly crack down on violations in the capital market.
Moreover, the “strong supervision” situation of the capital market reflects, on the one hand, the continuous improvement of the construction of the rule of law, on the other hand, in the face of the increasingly severe and complex situation of securities violations and crimes, it is necessary to constantly strengthen the connection and cooperation between administrative law enforcement and criminal justice. For example, focusing on “building a system”, in July 2021, the general office of the CPC Central Committee and the general office of the State Council issued the opinions on strictly cracking down on securities illegal activities according to law, which made important arrangements for accelerating the improvement of the judicial system and mechanism of securities law enforcement and strengthening the investigation, punishment and punishment of major illegal cases. In the same month, the administrative punishment measures for securities and futures violations officially came into force.
From the perspective of “execution linkage”, in March 2021, the amendment to the criminal law (XI) has been officially implemented, greatly increasing the penalties for crimes such as fraudulent distribution, information disclosure and fraud.
According to the data disclosed by the CSRC, in the first half of 2021 alone, the CSRC transferred 119 suspected criminal cases and clues to the public security organs and 266 subjects involved, an increase of more than double over the same period in 2020. Meanwhile, 17 major cases were copied to the procuratorial organs.
With the joint efforts of the three parties of “securities regulatory, public security and procuratorial”, the capital market has accelerated the construction of the working pattern of “rapid punishment, rapid investigation and rapid prosecution”, and a three-dimensional accountability system including administrative, criminal and civil affairs has begun to take shape, which will accelerate the construction of a standardized, transparent, open, dynamic and resilient capital market, And promote the capital market to be stable and far-reaching on the road of deepening reform.
As a major conference setting the tone of China’s economic work in 2022, the central economic work conference held in December 2021 specially pointed out that it is necessary to “fully implement the stock issuance registration system” and “strengthen the construction of financial rule of law”. This means that in the future, guided by the reform of the registration system, the capital market will be more predictable in the construction of relevant supporting systems.
the pilot registration system reform of Beijing stock exchange was implemented, and the number of qualified investors exceeded 4.75 million
In 2021, the capital market ushered in the third national stock exchange – Beijing stock exchange (hereinafter referred to as “Beijing stock exchange”). So far, China’s multi-level capital market has formed a pattern of dislocation development and interconnection of the three exchanges in Beijing, Shanghai and Shenzhen.
On September 2, 2021, the name of “Beijing stock exchange” sounded at the service trade fair for the first time. While excited, the encouraged capital market immediately made full efforts to implement it, and completed the preparations for the opening of the market in only 74 days, which is also the stock exchange with the shortest preparation time in China.
Speed is not the only bright spot in the construction of Beijing stock exchange. It is given the important task of supporting the high-quality development of innovative small and medium-sized enterprises. Based on the market positioning, Beijing stock exchange fully respects the development law and growth stage of innovative small and medium-sized enterprises. It not only follows the general law of market construction of the stock exchange, but also introduces an inclusive system design in terms of market access, financing and exit arrangements.
On November 15, 2021, the Beijing Stock Exchange opened the market. Yi Huiman, chairman of the CSRC, said at the opening ceremony, “The establishment of the Beijing stock exchange is a major decision and deployment made by the Party Central Committee and the State Council based on building a new development pattern and promoting high-quality development. It is of great significance to further improve the multi-level capital market, accelerate the improvement of the financial support system for small and medium-sized enterprises, and promote innovation driven development and economic transformation and upgrading.”
In fact, the Beijing stock exchange has indeed “fulfilled its mission”, and a series of data is the best evidence. As of December 31, 2021, the number of listed companies on the Beijing stock exchange has increased to 82, with a total market value of 272.275 billion yuan, of which four companies have a total market value of more than 10 billion yuan. Since the opening of the market, the average daily turnover of the Beijing stock exchange has increased by 3.04 times compared with the selected layer in August 2021, with an average daily turnover rate of 1.79% and an overall annualized turnover rate of 434.26%, which is in line with the liquidity characteristics of small and medium-sized market capitalization stocks. In 2021, the average increase of the whole stock market of the Beijing stock exchange was 98.90%, and the market wealth effect initially appeared.
In addition, investors are also another vital group of the Beijing stock exchange, and the high enthusiasm of investors for opening accounts is the most direct manifestation of the coordinated development of investment and financing brought about by the opening of the Beijing stock exchange. By the end of 2021, the number of qualified investors had exceeded 4.75 million, about 2.8 times that before the announcement of the establishment of the Beijing stock exchange; Institutional investors are also accelerating the layout. Stock public funds are traded in the market, all 8 new theme funds are over raised, and social security funds and QFII have entered the market.
It should be noted that since its birth, the Beijing stock exchange has operated steadily according to the logic of the registration system, becoming a new attempt under the vision of implementing the registration system in the whole market. Since the establishment of the Beijing stock exchange, the number of companies seeking listing according to the registration system path is steadily and orderly increasing, and the pilot registration system of the Beijing stock exchange has been truly implemented.
With the steady progress of issuance audit, the “reserve team” of Beijing stock exchange continued to expand. According to the data on the official website of Beijing stock exchange, as of December 31, 2021, 70 enterprises were in the stage of issuance and listing review, including 15 accepted, 37 inquired, 16 suspended and 2 passed the municipal Party committee meeting. In addition, the companies listed on the new third board have a strong willingness to prepare for the Beijing stock exchange, and the preparatory process has been significantly accelerated. As of December 31, 2021, 180 companies have submitted the listing guidance and filing materials of the Beijing stock exchange, with sufficient reserves.
Beijing stock exchange has formed a relatively complete reserve echelon of enterprises to be listed. It is expected that with the in-depth promotion of the registration system reform, the number of listed enterprises of Beijing stock exchange will continue to grow, and more innovative small and medium-sized enterprises will grow into the pillar force of the real economy with the help of capital.
Looking ahead, as a “newborn”, the Beijing stock exchange still faces many challenges, but it is also full of hope. As mentioned in the 2022 New Year speech of the Beijing stock exchange, “building the North stock exchange with high quality still has a long way to go” and “continuously consolidating the good start of the North Stock Exchange”.
