The new regulations on IPO inquiry have been implemented for more than half a year. With the increase in the number of broken new shares, all parties in the market pay more attention to the importance of “pricing power” and “Research on new shares”.
The reporter of the securities times made statistics on the newly issued registered new shares with a P / E ratio of more than 90 times and much higher than the industry average p / E ratio. It was found that in the extreme quotation, there are many figures of head public funds, 10 billion private placement, venture capital and foreign-funded institutions.
In the view of many insiders, although the new regulations on IPO inquiry have been implemented for a long time, there is still a phenomenon of “brainless innovation” in offline inquiry. There are many factors behind this. For example, the thinking of Bo finalists has not changed, and some fund companies still use the “finalist rate” to assess, resulting in high prices for winning the lottery. Some people also believe that there are still factors of insufficient research on new shares, especially that small buyer institutions do not have enough research power.
At present, the number of offline institutions participating in inquiry has reached a new low, reflecting the game of market participants, which is also the result of spontaneous market regulation. It is understood that some inquiry institutions do not have the research ability of new shares and temporarily withdraw. Once the market turns better, they may “follow the trend”.
It is worth noting that the phenomenon of “breaking” of new shares has attracted the attention of regulators. Recently, the Shanghai Stock Exchange organized a number of securities companies to hold a symposium to discuss the “breaking” phenomenon in the current market. The Shanghai Stock Exchange stressed that each lead underwriter should carefully write the investment value report in accordance with the specifications of the association, fully carry out the investor roadshow communication, improve the market risk, manage the issuer’s valuation and pricing expectations, reasonably plan the raised investment projects, and carefully determine the issuance price after fully considering the market, industry and underwriting risks. Next, consider including a large proportion of breaking and other indicators into the practice quality evaluation of the lead underwriter.
who still quoted high price after breaking
People from the capital market department of a number of securities companies told the securities times that in the past six months, the thinking of some inquiry institutions has not completely changed. They will fight every new time, and their attention to the research of new shares has not been significantly improved.
Data show that the breaking tide of new shares has appeared in January this year. At that time, 25% of registered new shares broke on the first day of listing. In the first three weeks of March (from 1st to 25th), 35% of registered new shares broke on the first day of listing.
The market is depressed, and the breaking risk has increased significantly. It seems that more than 30% of the breaking effect on the first day of listing has not been fully transmitted to the primary and semi markets. Among the new shares launched from March 28, some inquiry institutions still offer extreme prices, which is puzzling.
Taking a newly listed new share as an example, the issue price is more than 20 yuan, but some institutions offer a high price of more than 100 yuan offline. Another new share was issued at a price of more than 100 yuan, and 10 inquiry institutions offered a high price of more than 200 yuan.
The reporter of the securities times selected the observation sample – starting the IPO from March 28 to April 12, and issuing a total of 7 registered new shares with a P / E ratio of more than 90 times and much higher than the P / E ratio of the industry. In the inquiry process of these seven stocks, the quotations of a head fund company and a large fund company in South China were included in the “high price elimination” three times. Two life insurance institutions in Beijing have repeatedly appeared in the “high price elimination” list.
In addition, the quotations of two 10 billion private placement companies and an asset management company of a foreign-funded institution in Shanghai have also been included in the list of “high price elimination” for many times.
Many factors lead to “brainless quotation”
This year, when the breaking expectation is obvious, why are so many institutional investors on the high side? Is it “stupid people with more money” or “lagging response”?
“I think the thinking of some inquiry institutions has not changed, and they still stay in the inherent mode of the previous Bo shortlisted. This phenomenon exists. In order to be shortlisted, they will quote a high price,” said the head of the capital market department of a large securities firm.
Some investment bankers said that some inquiry institutions have a lack of pricing power and free rider mentality. Since the inquiry for new shares only excludes the high price of 1%, if other institutions lower the price, it doesn’t matter if they report the high price. Finally, the subscription is still based on the issue price.
Another head broker from the capital market department held the same view, saying that most inquiry institutions were “brainless and new”. He asked the reporter, “if offline institutions spend time studying new shares and give valuable quotations, but eventually have to compete with other institutions for the winning rate, why does he have the motivation to do new share research?”
The lack of professional research ability of new shares is on the one hand, on the other hand, the internal inquiry institutions are assessed by the “shortlist rate”. In the current period of breaking the normalization, whether the assessment of this index is still applicable needs to be re examined.
A medium-sized broker told reporters about the buyer’s internal quotation mechanism. As early as before the reform of the new inquiry regulations, many institutions assessed the “quotation shortlisted rate” of new products. At that time, the new shares made no loss, and the shortlisted rate was directly linked to the income. Now there is a break in the new share market, and some institutions still continue to assess the index, which affects the employees in charge of quotation to a certain extent.
Shenwan Hongyuan Group Co.Ltd(000166) the relevant person in charge of the issuance added that although the break will lead to some losses, institutional investors will consider the overall rate of return of the product. Due to the low allocation amount of each product on each new share, the break has little impact on the overall rate of return of the product. Considering comprehensively, in the face of the two important assessment indicators of shortlisting rate and rate of return, institutional investors will still tend to bid high prices to be shortlisted.
When some inquiry institutions do not have the research ability of new shares, the seller’s investment report has become an important reference for the quotation of inquiry institutions.
new shares research into “scarce goods”
Then, whether the high proportion of new shares will cause institutions to pay attention to the research of new shares? Will the new strategy change? In this regard, a number of industry insiders believe that in theory, research should indeed be increased, but many institutions do not have enough research capacity for new shares.
The person from the capital market department of the above-mentioned head securities firm said that from the current action of inquiry institutions, the so-called change in quotation strategy is to “not participate in the innovation, rather than spend some time studying new shares and offer a reasonable price.”
It is understood that the number of institutions participating in inquiry under the registration system of new shares has reached a new low, with about 250320 inquiry institutions, compared with more than 500 in the previous peak period.
A person from the capital market department of a medium-sized securities firm in Shenzhen said, “many inquiry institutions do not have the research ability of new shares, especially the small buyer institutions do not have the research strength. Now the market is not good, so they don’t fight new shares at all.” In his view, whether before or at the moment, it is hard to say how reasonable the IPO pricing is and whether it can reflect the real situation of the enterprise.
The person in charge of a medium-sized securities firm Research Institute told reporters that observing from the yield of new products, after the inquiry of new regulations, the yield of new products of fund companies with strong research ability will be higher, which also reflects that the current inquiry mechanism of new shares puts forward higher requirements for the research and pricing ability of institutions.
He believes that the breaking of new shares has affected the participation enthusiasm of institutions. In particular, it has a great impact on absolute income funds such as insurance funds and “fixed income +” funds, and their participation in innovation has decreased significantly. If the new share market continues to cool, the funds may withdraw further and make new ones.
From the buyer’s point of view, he Jinlong, general manager of Meili investment, said that at present, inquiry institutions need to conduct independent research and independent quotation on new shares, and the pricing requirements of “the lower of the four values”, as well as the consideration of internal game and shortlisted range should be more rational.
Inquiry institutions should study the fundamentals and growth of listed companies and their industries, and carefully consider innovation and inquiry.
An asset manager of a securities firm in East China told the securities times that inquiry institutions really need to increase the research on new shares, but in fact, many institutions do not have so many people to cover the research on new shares, which requires a lot of time and cost. It is expected that in the face of the current market environment, the new upsurge will gradually fade.
Hu Bo, manager of Rongzhi investment fund under private placement paipai.com, said that the new strategy is still a better strategy from the perspective of statistics and probability distribution. “The risk of private placement gaining new returns from a single bond has increased. Strategically, we should actively participate in the innovation to obtain the overall average rate of return of new shares. For inquiry, we should make a reasonable valuation and quotation based on the fundamentals of listed companies. If the quotation is too high, it is easy to be punished by the market.”
For the current IPO inquiry market, underwriters, as intermediaries, should show professional valuation and pricing ability, such as further giving play to the role of investment report as an “anchor” in issuance pricing.
However, some insiders believe that the current underwriters have failed to give full play to the professional valuation and pricing role in the pricing link, and there are even suspicions that the underwriters have maliciously raised the price.
The aforementioned person from the capital market department of Shenzhen medium-sized securities companies told reporters that at present, the inquiry institutions do not understand the new shares, especially the emerging industries facing the science and innovation board. It is very difficult to carry out valuation. “They mainly take the suggestions of the underwriter’s investment report as a reference. However, the investment report will always listen to the opinions of the issuer, so the investment suggestions given actually have some moisture.”
adhering to market-oriented reform
For the irrational quotation phenomenon in the current IPO inquiry, insiders suggest that the system can be optimized from many aspects.
The above-mentioned person from the capital market department of securities companies believes that the independent placement right of securities companies should be introduced, which can encourage fund companies to invest corresponding resources in new share research to a certain extent.
Taking the IPO underwriting and issuance system in Hong Kong as an example, the lead underwriter has a large independent distribution right in terms of independent placement to professional investors and cornerstone investors, and can distinguish the level of investors and determine the placement quantity. The factors considered by the underwriter include: Investor conditions, quotation and participation in roadshow, past investment or strategic cooperation relationship with the underwriter, etc. The A-share IPO market also introduced the independent placement system of securities companies, which was later stopped due to the great controversy over the interest transmission of underwriters in the market.
Wang Jiyue, an investment banker, put forward three suggestions. First, it is suggested to modify the issuance rules, suspend the issuance when more than 30% of the online or offline issuance is abandoned, and then choose the opportunity to issue, so as to improve the market constraints of the secondary market on the issuance of new shares. Secondly, it is suggested to eliminate the high price of 1% and adjust it to eliminate the extreme quotation, such as excluding the quotation beyond 30% or 50% of the median quotation of all institutions. Of course, only the high price part can be excluded, and then calculate the four number range and price it. Finally, it is suggested that institutions with multiple extreme quotations should be regarded as having no quotation ability and be included in the blacklist of offline inquiry institutions, and shall not participate in offline quotation for a period of time.
In fact, people in the industry generally believe that the market-oriented reform has achieved phased victory. Next, the reform should be determined and continue to adhere to the direction of market-oriented reform.
Shenwan Hongyuan Group Co.Ltd(000166) the relevant person in charge of the issuance said in an interview with the reporter of the securities times that the break is a normal phenomenon of the marketization of the issuance of new shares and needs to be treated correctly and rationally. We should unswervingly adhere to the direction of market-oriented reform. In view of the development process of China’s capital market, necessary supervision is indispensable. It is suggested that the regulators can issue relevant policies in time.
The person in charge of the capital market department of the aforementioned large securities companies analyzed to reporters that the breaking of new shares is not a universal breaking, but the breaking of specific stocks in specific industries, which is not only the role of the market mechanism, but also the result of the spontaneous regulation of the market. “It should be said that it is not easy for the reform of the inquiry system for new shares to come to this step, and there has been considerable progress in marketization. The reform needs to be determined and move forward in the direction of marketization, so that the market will gradually mature.”
