The bond market officially opened, and the functions of the exchange were further improved; The 920 code segment function was enabled, and the market position continued to improve; Issuing guidelines on sustainability reporting to promote the quality of listed companies; Accelerate the expansion of market makers and carry out internal testing of fixed income platforms...... Since the beginning of this year, the Beijing Stock Exchange has continued to promote the implementation of the "19 Deep Reforms" to consolidate the foundation for the high-quality development of the Beijing Stock Exchange.
Affected by various factors, the Beijing Stock Exchange 50 Index once hit a record low in the first half of the year. Looking forward to the second half of the year, many institutions believe that with the resumption of key aspects of the IPO review of the Beijing Stock Exchange, there are many market highlights and investment opportunities, including investment opportunities such as new quality productivity and valuation repair.
The market function is more perfect
In the first half of the year, the Beijing Stock Exchange continued to deepen the reform with strong supervision, risk prevention and development as the main line, accelerated the implementation of the "19 deep reforms", and further promoted the role of the market.
The market pattern of the coordinated development of stocks and bonds on the Beijing Stock Exchange has taken shape. On January 15, the corporate (corporate) bond market of the Beijing Stock Exchange officially opened. On the first day, 3 corporate bonds were listed, with a total bond issuance scale of 2.48 billion yuan. Zhou Guihua, chairman of the Beijing Stock Exchange, said on the same day that the opening of the corporate (corporate) bond market of the Beijing Stock Exchange marked a new step in the construction of the bond market of the Beijing Stock Exchange. The opening of the credit bond market is a new starting point for the high-quality construction of the Beijing Stock Exchange, which will inject new momentum into the high-quality development of the mainland bond market.
The Beijing Stock Exchange has initially formed a basic bond product system including treasury bonds, local government bonds, corporate bonds, corporate bonds, as well as a series of special varieties such as science and technology innovation bonds and green bonds, and the bond market has made a good start. According to the website of the Beijing Stock Exchange, from January to June, the Beijing Stock Exchange issued a total of 2,203.5 billion yuan, 101.033 billion yuan and 4.48 billion yuan of national bonds, local government bonds and corporate bonds respectively.
The Beijing Stock Exchange officially launched the independent code segment, which not only highlighted the independent status of the exchange, but also effectively enhanced the market image of the Beijing Stock Exchange. On April 22, the Beijing Stock Exchange launched the 920 code number segment function. This will help improve the recognition of listed companies on the Beijing Stock Exchange and facilitate investors to search for and trade listed stocks. On May 30, Wanda Bearing, the "first share of 920 code" on the Beijing Stock Exchange, was listed.
The team of market makers on the Beijing Stock Exchange has been further expanded. On January 30, the Beijing Stock Exchange organized a symposium on market makers. The relevant person in charge of the Beijing Stock Exchange said that since the launch of the market-making business of the Beijing Stock Exchange, the market makers have actively fulfilled their quotation obligations, continued to expand the scale of their business, and gradually enriched their business models, which have effectively played the role of providing liquidity and stabilizing volatility. According to the website of the Beijing Stock Exchange, a total of 17 brokerages have obtained the qualification of market-making business of the Beijing Stock Exchange.
Take multiple measures to help the high-quality development of listed companies on the Beijing Stock Exchange. In early February, the Beijing Stock Exchange formulated and issued the "Action Plan for Promoting the Improvement of the Quality of Listed Companies on the Beijing Stock Exchange", aiming to promote the formation of a group of listed companies that actively serve high-level scientific and technological self-reliance, innovation, corporate governance norms, and reliability. On April 12, in order to promote listed companies to actively practice the concept of sustainable development, achieve high-quality development, and enhance the long-term investment value of listed companies, the "Guidelines for the Continuous Supervision of Listed Companies on the Beijing Stock Exchange No. 11 - Sustainability Report (Trial)" was released.
Implement the concept of in-depth and strict supervision and strict management. On May 24, in order to further standardize the shareholding reduction behavior of shareholders, the revised "Guidelines for the Continuous Supervision of Listed Companies on the Beijing Stock Exchange No. 8 - Share Reduction and Shareholding Management" was issued and implemented. On June 7, the "Implementation Rules for the Administration of Programmatic Trading on the Beijing Stock Exchange (Draft for Comments)" was released to the market for comments, aiming to promote the development of programmatic trading norms and maintain the order of securities trading and market fairness.
In addition, the Beijing Stock Exchange actively implements the important arrangements of the "1+N" policy system in the capital market, and issues and implements a number of business rules covering public offerings and listings, delisting, listing committees and mergers and acquisitions committees, major asset restructuring, dividends, etc.
The average price-to-earnings ratio fell back to 20x
Since the beginning of this year, the secondary market of the Beijing Stock Exchange has failed to continue the hot market in the fourth quarter of 2023, especially in the second quarter, with market risk appetite declining, liquidity narrowing, and investor confidence being affected.
According to the website of the Beijing Stock Exchange, from January to May, the market volume of the Beijing Stock Exchange was 22.181 billion shares, 12.611 billion shares, 11.816 billion shares, 8.899 billion shares and 7.533 billion shares, and the turnover was 277.573 billion yuan, 145.860 billion yuan, 142.584 billion yuan, 97.943 billion yuan and 77.725 billion yuan respectively.
In the first half of the year, the Beijing Stock Exchange 50 Index fell by 34.52% and closed at 708.97 points. On June 26, the Beijing Stock Exchange 50 Index once fell below 700 points, hitting a record low; 232 BSE stocks fell, accounting for 93% of the market. Among them, 129 stocks fell more than the BSE 50 Index, accounting for 52% of the market.
"The valuation repair of the Beijing Stock Exchange brought about by liquidity has come to an end for the time being." Zhu Haibin, general manager of the Beijing Stock Exchange Research Center of Kaiyuan Securities, said that from November 2023, the average daily turnover rate of the Beijing Stock Exchange will increase from 1.75% to 7.88%, and to 12.85% in December of the same year. Correspondingly, the valuation of stocks on the Beijing Stock Exchange has recovered quickly, and the average price-to-earnings ratio has soared from 17 times to 30 times. However, since March this year, market liquidity has entered a new normal, and the average price-earnings ratio has fallen back to 20 times.
Industry insiders believe that there are many factors that lead to the current round of market adjustment of the Beijing Stock Exchange. Liu Jing, chief analyst of Shenwan Hongyuan, made an analysis from four dimensions: policy, capital, new stock supply, and valuation and cost performance. First of all, the pace of policy implementation of the Beijing Stock Exchange is slower than expected, and under the new "National Nine Articles", strict financial supervision is generally conducive to the entry of funds into high-dividend large-cap stocks. Secondly, there is a lack of incremental capital intervention such as index funds and stock public offering opening permissions last year, while the traditional absolute return funds of the Beijing Stock Exchange (proprietary brokerage companies, private placement products, etc.) have suffered overall losses in the market adjustment since the beginning of this year, and risk appetite has declined significantly. Third, the pace of new stock issuance on the Beijing Stock Exchange has slowed down, and the market lacks new industry hotspots. Finally, the performance of the stock listed companies on the Beijing Stock Exchange in the first quarter was weaker than that of the "Entrepreneurship and Entrepreneurship Board", and the valuation discount of the "Entrepreneurship and Entrepreneurship Board" was relatively reasonable.
Huang Yuchen, an analyst at Zheshang Securities, said that the Beijing Stock Exchange has a short-term pullback due to factors such as the slowdown in incremental capital inflow, the slow pace of policy implementation, and the relative cooling of sentiment. Under the trend of "steady optimization of the system + gradual increase in the willingness of funds to participate", the Beijing Stock Exchange hopes to continue to attract incremental capital participation, thereby significantly improving the long-term liquidity problem.
It is worth mentioning that although the overall trading heat of the market has cooled, the new shares of the Beijing Stock Exchange still perform well. According to Choice data, the cumulative average increase of the 10 stocks listed and traded on the Beijing Stock Exchange this year was 45% and the median was 30.89%, of which 2 stocks rose by more than 1 time.
Explore investment opportunities in multiple dimensions
Looking forward to the second half of the year, the market has more expectations for the Beijing Stock Exchange, and there is no shortage of highlights and investment opportunities.
In the past month, the key aspects of the Beijing Stock Exchange's IPO, such as acceptance, listing and listing, have been fully resumed. Market participants believe that the return to normal operation of the whole process of the listing business on the Beijing Stock Exchange will help improve the quality and scale of listed companies on the Beijing Stock Exchange, increase the supply of primary and secondary markets, and strengthen market expectations and market confidence; At the same time, it will help drive the development of the new third board market.
Fan Xiangxiang, an industry analyst at the Beijing Stock Exchange of Galaxy Securities, said that in the first half of the year, the relevant rules of the Beijing Stock Exchange were implemented one after another, and the new "National Nine Articles" promoted further strict supervision and high-quality development, and the characteristic positioning of the Beijing Stock Exchange to serve innovative small and medium-sized enterprises was more prominent, and the brand attractiveness and market influence of the Beijing Stock Exchange were enhanced. Looking ahead, as there is no shortage of high-quality backup listed companies on the New Third Board, we are still optimistic about the high-quality and orderly expansion of the Beijing Stock Exchange in the future. From the perspective of capital, after the implementation of ETF products on the Beijing Stock Exchange, the proportion of institutional allocation and the participation of individual investors are expected to continue to increase.
Huang Yuchen believes that the innovation and implementation pace of investable assets and fund products on the Beijing Stock Exchange are accelerating. After the "19 Articles of the Deep Reform" put forward the policy guidelines to guide public funds to expand their investment in the Beijing Stock Exchange, the product innovation and launch speed of the Beijing Stock Exchange has been accelerating. For example, the "19 Articles of the Deep Reform" proposes to support the construction of the credit bond market of the Beijing Stock Exchange, and promote the research of innovative products such as ETFs, LOFs, and REITs. On December 18, 2023, the first constituent index enhanced fund product of the Beijing Stock Exchange, Chuangjin Hexin Beijing Stock Exchange 50 Component Index Enhanced Fund, was officially offered for public sale, promoting the product innovation of the Beijing Stock Exchange to a new level. In addition, a number of funds have amended their contracts to expand their investment scope to stocks on the Beijing Stock Exchange, and funds are expected to be more actively involved in the allocation of the Beijing Stock Exchange in the future, bringing more incremental funds and liquidity.
Exploring opportunities for growth companies on the Beijing Stock Exchange with new quality productivity as the core is highly respected by institutions. "In the second half of the year, it is recommended to pay attention to specialized and special new enterprises that meet the new quality productivity, especially those whose indicators are in line with the '315 New Deal' of the China Securities Regulatory Commission, including a price-earnings ratio of 10 times to 15 times, revenue growth in 2023 between 10% and 15%, and a market value of 1 billion yuan to 1.5 billion yuan. This type of company is a typical representative of a growth company. Zhu Haibin said, "It is expected that there will be greater opportunities to participate in the investment of new shares on the Beijing Stock Exchange, and the money-making effect of new shares may be maintained." On the one hand, it is expected that the pace of new stock issuance on the Beijing Stock Exchange will remain stable, and there will be no significant pressure on market supply and demand; On the other hand, the valuation center of new stock issuance is basically stable at 16 times, coupled with the generally large volume of new stock performance, and some targets have relatively scarce industry attributes. ”
"The Beijing Stock Exchange 50 has been adjusted deeply, and the market needs to see more changes in policies or fundamentals, pay attention to bottom-up investment opportunities, and focus on stocks with good performance growth expectations and growth flexibility in the export chain." Liu Jing said.
The Beijing Stock Exchange will take reform as the starting point to accelerate the high-quality construction of the market. Zhu Jieyu, an analyst at Soochow Securities, said that since the introduction of the "19 Articles of Deep Reform", the Beijing Stock Exchange has successively issued relevant policies to actively promote the stable development and reform and innovation of the Beijing Stock Exchange, improve the market mechanism, and accelerate the creation of a system of service for innovative small and medium-sized enterprises, laying a policy foundation for the high-quality development of the Beijing Stock Exchange.
Source: China Securities Journal