1. Have a great weekend, brothers and sisters! A big event broke out in the middle of the night! The IPO will be reviewed and restarted! On the evening of May 10, the Shanghai and Shenzhen Stock Exchanges issued an announcement of the review meeting of the Listing Committee, intending to review the company's application for issuance and listing on May 16. Among them, 1 Shenzhen IPO issuance and listing application and 1 Shanghai stock exchange refinancing application were reviewed, which marked the official resumption of IPO review. Because after the Spring Festival, there has been no IPO company in A-shares for 3 months to be reviewed by the Listing Committee. The exchange's most recent listing committee meeting was on February 6, that is, there has been no IPO company meeting for three months, so the question is, what is the impact of the resumption of IPO review on A-shares? Dalong tells you the answer to three questions!
2. What is an IPO? What is the difference between an IPO and a listing?
IPO: An initial public offering is the first time a business sells its shares to the public. Typically, IPOs are organized by financial institutions such as investment banks to raise capital for businesses by issuing new shares. These funds can be used for various development needs of the enterprise, such as expansion, R&D, marketing, etc.
Listing: Listing is when a company's pre-existing shares are listed and traded on a stock exchange for public investors to buy and sell. Shares of listed companies must be registered on the stock exchange and must comply with relevant regulatory and disclosure requirements.
3. Why was the IPO review suspended in the early stage?
As you know, A-shares have fallen for 3 years, and in January this year, it was an epic fall, and in January 24, A-shares fell even more epicly, with the Shanghai Composite Index falling 6.27%, the Shenzhen Component Index falling 13.77%, and the ChiNext falling 16.81%, which is really exaggerated, more than last year's decline, all of which exceeded last year's decline, and all of them recorded the largest monthly decline since the circuit breaker in 2015. Therefore, the IPO was suspended at that time to alleviate the downward pressure on the stock market, and then in February, A-shares really rose sharply, because the more new shares were issued, the greater the absorption of market funds, affecting investor confidence, so the regulator suspended the IPO review at that time.
4. Why is the IPO restarting at this time?
On April 12, 2024, the Shenzhen Stock Exchange officially issued 9 supporting business rules, including the Rules for the Review of Stock Issuance and Listing, after the State Council issued the Several Opinions on Strengthening Supervision and Risk Prevention and Promoting the High-quality Development of the Capital Market and the National Nine Articles.
The Shenzhen Stock Exchange revised and issued 9 business rules, which are specifically divided into three categories: first, 6 issuance and listing review rules, namely the "Stock Issuance and Listing Review Rules", "Listed Companies Material Asset Restructuring Review Rules", "Listing Review Committee and M&A and Reorganization Review Committee Management Measures", "Interim Provisions on the Application and Recommendation of Issuance and Listing of GEM Enterprises", as well as "Guidelines for the Acceptance of Application Documents" and "Guidelines for On-site Supervision". The main purpose of the revision and improvement of the above rules is to strengthen the strict control of the market entrance, improve the financial indicators of issuance and listing, improve the positioning and grasp standards of the GEM, strengthen the audit of financial authenticity, increase on-site supervision, standardize the pre-listing surprise "clearance" dividends, and tighten the responsibilities of intermediaries. The second is one issuance and underwriting rule, namely the "Guidelines for Matters of Concern in the Reporting of Investment Value Research Reports". The main purpose of its formulation is to implement the requirements of strict supervision of high-priced over-offerings, further standardize the issuance of investment value research reports by underwriters, and strengthen the supervision of issuance and underwriting. The third is two regulatory rules for listed companies, namely the Stock Listing Rules and the GEM Stock Listing Rules. The main purpose of the revision is to strengthen the continuous regulatory requirements, optimize the listing conditions, strengthen the hard constraints on cash dividends, strictly enforce the delisting standards, and accelerate the formation of a normalized delisting pattern that should be withdrawn and cleared in a timely manner.
The release of the new listing regulations reflects the determination of the regulator for the long-term healthy development of A-shares, and then we can review the performance of A-shares in recent months, the A-share Shanghai Composite Index rose from a low of 2635 points in January all the way to 3163 points, up more than 20% from the bottom, has entered a technical bull market, but what is the use, just a technical bull, does not affect the loss of money, the index is back to lose more money.
5. What is the impact of the resumption of IPO review on A-shares?
Although the implementation of the new rules for listing in the early stage will improve the quality of listed companies to a certain extent, high-quality new listed companies will bring new investment opportunities and increase the vitality and attractiveness of the market, but this is a long-term good, short-term has no impact on A-shares, from a short-term point of view, the IPO restart, the new listing will attract part of the capital flow to the new shares, which is a negative decline in the market of A shares at this stage.
6. So what should I do with A-shares next?
Pull the index to 3200 in order to get on the new stocks, look back and see that there are still a lot of tickets lying at 2700, it may be that the regulator thinks that A-shares can now afford this IPO, Dalong believes that it is not, A-shares are now weak market has not changed, and it is still difficult in the short term, in short, everyone should also be prepared for the short-term adjustment of A-shares after the IPO restart.