The market around the Spring Festival showed a significant contraction in trading volume, and the general rise after the holiday was the return of funds before the holiday. Although the trend of the V-shaped reversal of the market has yet to be confirmed, the market has bid farewell to the stage of rapid adjustment and is expected to enter a volatile trend. As investors gradually return after the holiday, market sentiment will begin to recover. The recent red envelope market is supported by favorable factors for the rebound of the peripheral market, but the endogenous positive factors that really affect the rise of A-shares have finally surfaced in the weekend after the holiday.
The extension of the authorization period of the share issuance registration system to February 29, 2020, this news is exciting, considering that the current IPO issuance speed is actually no less than the registration system, so it is necessary to consider its two sides to interpret, and the focus is still on the IPO issuance in 2018.
When it comes to the registration system, this is the general direction of future stock market reform. The stock price will eventually reflect the performance of listed companies, not to mention that in the case of the growth rate of new stock issuance in the past two years, the stock prices of some underperforming stocks in the secondary market have rapidly declined back to the level before the start of the bull market in 2015. This shows that the registration system, like the property tax, has high expectations for it, and when the market generally believes that there will be a return in valuation, the process of squeezing the bubble has begun ahead of schedule.
As early as 2016, when the National People's Congress authorized the decision on the starting point of the two-year implementation period, the capital market responded positively. Since March 2016, A-shares have launched a large wave of phased upward movements, and this upward trend has continued until the fourth quarter of 2017. If the extension of the registration system in that year was positive and gave the market a breathing space, then this time it is also a positive effect. However, we believe that the situation is very different now than it was two years ago. Fundamentally speaking, the real implementation of the registration system is an opportunity for the capital market, controlling the speed of issuance in the market, will make many investors feel great uncertainty, the more dare not be assured to boldly participate in value investment, which will make the speculative atmosphere of A shares continue to exist for a long time.
On the other hand, the proposed extension of the registration system also has a certain protective effect on A shares. Because the registration system represents a completely capitalized thing, and China's securities market still has a long way to go compared with the mature markets in Europe and the United States, financial institutions, from banks to securities companies, are far from full capitalization. Whether it is a small and medium-sized board or a ChiNext board, the cost of enterprise violations is not high, and problems cannot be dealt with in time, and exchanges will face greater market pressure. Therefore, in the case that the relevant system is not perfected, the later the registration system is introduced, it is indeed a good thing for investors.
On the whole, the positive effect of the proposed extension of the registration system on the secondary market is weaker than when it was first announced in 2016, and the actual impact on small and medium-sized stocks depends on the market's response to it, not absolutely positive or negative. At the same time, after about two years of testing, this extension period is a process of squeezing bubbles for small and medium-sized listed companies, and some real blue chips will be born during this time, as well as future growth of technology-based leading enterprises.
This article originated from China Securities News
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