From the “invincible myth” to frequent breaking, the fund’s attitude towards new shares is changing significantly.
On the one hand, as an important buyer in the new market, the frequent breaking of new shares has significantly reduced the fund’s new income, and the enthusiasm for new shares has also cooled down. In order to reduce the impact of the breaking of new shares on investment income, some funds choose not to participate in the new development, and some funds are adjusting the new development strategy and making positive response.
On the other hand, as a professional institutional investor, public funds also bear the important responsibility of discovering the value of new shares and reasonably pricing. From the previous holding together to lower the price to high valuation, the IPO market-oriented reform under the registration system is putting forward higher requirements for the fundamental research and quotation ability of public funds.
fund’s new income has shrunk
Since the introduction of the “new inquiry regulations” in September last year, the marketization process of A-share IPO pricing has accelerated, and the phenomenon of new share issuance has become more and more common. Especially since the beginning of this year, with the superposition of market shock and low investor sentiment, the breaking of new shares has reached a small climax in the near future.
According to the data, as of April 22, of the 114 new shares listed on A-Shares this year, 39 shares broke on the first day of listing, with a breaking ratio of more than 34%. Since April, the breaking of new shares has further intensified, with 16 of the 28 listed new shares breaking on the first day, accounting for about 57%.
As an important participant in offline innovation, the yield of public funds has also shrunk sharply in this round of breaking tide.
The fund manager of a new fund in Shanghai disclosed to the securities times that a public offering new fund with a scale of about 500 million yuan can contribute about 6% ~ 8% of the annualized yield in previous years, while he expects it to be reduced to 2% ~ 3% this year.
Huaan Securities Co.Ltd(600909) Financial Engineering Analyst Yan Jiawei calculated the monthly new income since November 2021. Under the assumption that all new shares were shortlisted, and based on the average winning rate of offline class a investors (public funds and social security funds), it is estimated that the new income of RMB 200 million scale account in November 2021 was RMB 1669400, that in December 2021 was RMB 1440700, that in January 2022 was RMB 878200, and that in February 2022 was RMB 189900, The new revenue in March 2022 was 530300 yuan, and that in April 2022 was – 100400 yuan. The new revenue decreased month by month.
participation enthusiasm decreased significantly
The frequent breaking of new shares is greatly affecting the participation enthusiasm of investors. Retail investors and institutional investors are responding to the breaking of new shares with their own practical actions. A number of fund sources said that the number of accounts of the company participating in new development has decreased, the participation attitude has become cautious, and even some funds choose not to participate in new development.
Zhou Ping, general manager and fund manager of “fixed income +” Investment Department of Western Lide fund, cited data as an example, “For example, the amount of new shares abandoned by retail investors has reached a new high recently; for example, from the perspective of offline subscription, the number of inquiry accounts involved in the peak period has reached 11500, which has now decreased to about 7500 ~ 8000, and the overall number of accounts has declined significantly; in addition, investors have also begun to judge the quality of new shares, and the number of accounts involved in some new shares is even only about 4000 ~ 5000.”
Zeng Wenhong said that his enthusiasm for the issuance of new shares in the market has been reduced, and the overall yield of some fund managers has also been reduced
Yan Jiawei made statistics on the recent fund’s new participation from the two dimensions of company level and product level.
From the perspective of fund companies, in the past three months (i.e. from January 2022 to now), there are 57 fund companies with a participation of more than 90%. Compared with the tracking data one month ago (from December 2021 to March 18, 2022, there are 85 fund companies with a participation of more than 90%), the new participation of fund companies has decreased rapidly.
From the perspective of products, the median participation rate of active equity funds in the past three months is 83.12%, and the shortlisted rate of inquiry is 64%. The median participation rate of “fixed income +” funds in the past three months is 71.43%, and the shortlisted rate of inquiry is 62.5%. Some “fixed income +” funds have taken the lead in withdrawing from the new market.
For a long time in the past, playing Xindu was an important way to thicken the income of “fixed income +” funds and index enhancement funds. In the face of frequent breaking of new shares, many funds had to change their investment strategy, and this change has been confirmed in the first quarterly report just disclosed.
For example, in the first quarterly report just disclosed, a “fixed income +” Fund said that since the breaking of new shares has become the norm, the new income has decreased significantly, and the stock position center has been appropriately improved. The stock structure has also changed from undervalued blue chip to a configuration dominated by industries with tight supply and demand in the necessary consumption, real estate industry chain and new energy industry chain, from relying on the active stock selection and aggressiveness to increase the stock bottom position to increase the income.
For another example, fof generally participates in innovation through two levels: one is to allocate new fund or “fixed income +” fund to indirectly obtain new income; Second, build a stock bottom position and directly participate in the subscription of new shares.
However, in the first quarterly report of this year, a fof product wrote, “because new shares are frequently broken, the fund has reduced the stock bottom position in the portfolio to be purchased with new shares, and redeemed the new share strategy fund at the same time.” In addition, some pension fofs with stable style began to reduce the subscription of new shares as early as the end of last year. A pension fof wrote in last year’s fourth quarter newspaper, “in the fourth quarter, considering the decline of new income, the fund will no longer participate in new investment and gradually convert bottom stocks into equity funds.”
new pursuit “effective shortlist”
Of course, avoiding innovation is only an individual choice made by some funds based on product positioning and investment strategy, and more funds still choose to meet difficulties and respond actively. However, the increasingly market-oriented pricing of new shares after the “new inquiry regulations” undoubtedly puts forward higher requirements for the fundamental research and quotation ability of public funds.
Zhou Ping said that since the breaking of the first batch of new shares after the inquiry of the new regulations, the company has been keenly aware that the income of new shares is no longer risk-free income, and the higher the finalist rate of new shares is no longer the better, and put forward the strategic requirement of “pursuing effective finalist” for the first time, that is, the finalist rate of non breaking new shares should be as high as possible, and the finalist rate of breaking new shares should be as low as possible. The company also takes this as the assessment standard of the new share team.
\u3000\u3000 “The frequent breaking of new shares determines that we must pursue effective shortlisting, which is difficult. We need to conduct in-depth research on the new share market and the target of new shares. When pricing new shares, we not only pay attention to the fundamentals of the company, predict the performance of the company, and price with reference to the reasonable valuation of comparable companies, but also pay attention to the performance of the market and adjust the valuation according to risk preference and micro transaction structure The premium or discount level of the company shall be combined to reasonably price the company. ” Zhou Ping made a detailed introduction.
At present, this strategy works more effectively. According to Zhou Ping, under the guidance of pursuing effective shortlisting strategy, the shortlisted income of Western profit in the first quarter of this year was significantly higher than that of all new shares, reflecting the effect of avoiding breaking.
A researcher in charge of research on new shares of a public fund admitted that after the new regulations, the team expected the price of new shares to increase and may break. The era of “mindless innovation” has ended. Institutions will selectively participate in the comprehensive fundamentals and market sentiment, and the number of institutions participating in inquiry will be significantly differentiated in the future.
The data show that from the offline issuance date, among the 98 new shares placed offline this year, the average number of institutions participating in the inquiry is 755, of which only 181 are the least and 3419 are the most, with a difference of nearly 19 times.
“We believe that due to the gap in investment and research strength among institutions, the yield of new shares will be polarized in the future. For institutions with strong investment and research strength and the ability to reasonably price new shares, the effective yield of new shares is expected to be higher than the average level of the market, while institutions without investment and research strength may gradually withdraw from the new share market.” Zhou Ping said.
IPO pricing returns to reasonable
requires joint efforts of multiple parties
Overseas, the breaking of new shares is a common phenomenon in the mature securities market, and the end of the myth of the invincibility of A-share new shares is also a manifestation of the gradual maturity of China’s securities market. But at the same time, the recent breaking of such a high frequency also reflects, to a certain extent, that there are still some pain points in the current new share market.
\u3000\u3000 “At present, there are two main reasons for the breaking of new shares. First, the overall A-share market is in the stage of wide fluctuation, which has the impact of low mood on the first day of new shares listing; second, after the new rules for inquiry of new shares, the current valuation of new shares is relatively high, and there is a high premium compared with the valuation of comparable companies in the same industry in the secondary market. Before the above two reasons are not changed, the probability of breaking of new shares will be the same Normal phenomenon. ” Zeng Wenhong said.
Zhou Ping further added that at present, there are still some pain points in the subscription of new shares. For example, under the restriction of the high price exclusion ratio in the new inquiry rules, institutions without pricing power blindly reported high prices to promote the overall valuation level of new shares in order to pursue finalists, while institutions with pricing power may be forced to improve the valuation and pricing of new shares, resulting in an increase in the probability of breaking new shares after listing.
In addition, the excessive pricing of new shares leads to the over raising of the issuer. The over raised funds have nowhere to invest and can only buy bank financial management, which is also contrary to the original intention of supporting the development of the real economy.
“We believe that if we rely on the spontaneous regulation of the market, it may take time for the participating institutions to gradually return to the rationalization of the pricing of new shares, and the breaking of new shares may occur frequently.” Zhou Ping said that the return to reasonable pricing under the new regulations requires the joint efforts of many parties to guide investors to reasonably participate in the pricing and subscription of new shares. Among them, public funds should make contributions to the value discovery of new shares as much as possible, reasonably price and improve the income of new shares by pursuing effective shortlisting.
