The first day earnings effect of new stocks has improved, and the enthusiasm for new listings on the Beijing Stock Exchange is gradually rising
From the latest stock subscription situation, the enthusiasm for new listings on the Beijing Stock Exchange is rapidly increasing.
Last week, the issuance results of Keqiang Shares on the Beijing Stock Exchange showed that the number of effective subscription investors for online new listings was about 128400, with an effective subscription quantity of about 12.861 billion shares and a subscription multiple of 450.89 times. The total frozen funds were about 80.8 billion yuan, setting a new high for frozen funds issued by the Beijing Stock Exchange since March 2022.
Not long ago, Liwang Shares, which opened for subscription, also attracted 74500 investors to participate in online issuance. The online effective subscription multiple was 323.98 times, with an effective subscription quantity of 7.079 billion shares. The frozen subscription funds reached 42.473 billion yuan, exceeding the average of about 10 billion yuan this year.
Institutions predict that in the future, the Beijing Stock Exchange will attract more high-quality small and medium-sized enterprises represented by "specialization, refinement, uniqueness, and innovation" and hidden champions in segmented fields to go public. The new policy reforms will activate market trading funds, improve overall fund utilization efficiency, and promote balanced development of the primary and secondary markets.
The Beijing Stock Exchange has a positive sentiment towards new arrivals
On the occasion of its second anniversary, the Beijing Stock Exchange has successively released multiple measures to continuously boost market confidence.
Firstly, the Beijing Stock Exchange, in collaboration with China Securities Depository and Clearing Corporation, revised the Implementation Rules for the Public Issuance and Underwriting of Stocks by the Beijing Stock Exchange to Unspecific Qualified Investors, which were released and implemented on August 23, 2023.
On September 1st, the China Securities Regulatory Commission issued the "Opinions on the High Quality Construction of the Beijing Stock Exchange", which consists of 19 articles. The Beijing Stock Exchange and the National Equities Exchange Corporation issued the first eight reform and innovation measures, fully promoting the high-quality development of the Beijing Stock Exchange.
In this regard, multiple institutions have shown expectations of boosting the new regulations, and investor confidence and enthusiasm have quickly been reflected in the implementation of new regulations.
On September 13th, Keqiang Shares, which launched online issuance and subscription, had a total frozen capital of about 80.8 billion yuan, setting a new high for frozen funds issued by the Beijing Stock Exchange since March 2022. The company strategically allocated 5.9758 million shares, with an online issuance of 28.5242 million shares. Approximately 44500 investors were allocated shares, with a distribution ratio of 0.22%.
In addition, Keqiang Co., Ltd. has introduced 10 strategic placements that have already been paid for, including Jiangyin Lide Special Fabric Co., Ltd., Suzhou Yidian Capital Management Co., Ltd., Jinchuang Group Co., Ltd. Chenming Asset Management and Kaiyuan Securities have also received 300000 shares each.
As the first new share after the implementation of the detailed rules, Liwang Shares also received 74500 investors to participate in online issuance. The effective online subscription multiple was 323.98 times, with a total effective subscription quantity of 7.079 billion shares and a frozen subscription fund of 42.473 billion yuan.
Both Keqiang and Liwang have frozen funds that exceed the overall average of the Beijing Stock Exchange this year.
According to incomplete statistics, a total of 42 stocks were issued and listed on the Beijing Stock Exchange in the first half of 2023, with a total of 86.9511 million yuan of frozen funds for online issuance. After arithmetic average, the frozen funds for online issuance of a single new stock were 2.0703 million yuan, and after weighted average, it was 3.7 million yuan.
In the second half of the year, there has been a significant change in this data. According to statistics, since the second half of 2023, a total of 16 stocks have been listed and issued on the Beijing Stock Exchange, with a total of 49.065 million yuan of frozen funds issued online. After arithmetic average, the frozen funds for online issuance of a single new stock were 3.0629 million yuan, an increase of 47.9% compared to the first half of the year, and a weighted average of 3.9759 million yuan, an increase of 7.46%.
According to previous regulations, when a company publicly issues stocks and goes public on the Beijing Stock Exchange, after passing the review by the Beijing Stock Exchange and registration with the China Securities Regulatory Commission, it needs to go through many stages such as submitting the issuance plan, pricing, disclosing the issuance announcement, subscription, allocation, disclosing the issuance result announcement, disclosing the listing announcement, and going public, which results in a lot of redundant work.
Kaiyuan Securities stated that the optimization of the IPO process has focused on internal process improvement and efficiency tapping without increasing the burden on market entities, reducing the overall time required for the new stock issuance and listing process by about 20%. Specifically, on the one hand, it shortens the duration of freezing subscription funds. The Beijing Stock Exchange and China Securities Depository and Clearing Corporation have collaborated to carry out technological transformation and streamline information exchange processes, reducing the freezing time for investors participating in new stock subscriptions from 3 trading days to 2 trading days.
On the other hand, it is to reduce the business processing interval between subscription and listing processes. By optimizing internal working mechanisms and minimizing business processing time, the interval between direct pricing issuance and subscription will be adjusted from 2 trading days to 1 trading day, consistent with the current situation of inquiry issuance; Shorten the interval from disclosure of listing announcement to new stock listing by one trading day. After the adjustment, the overall process of direct pricing and competitive issuance and listing has been reduced from 13 trading days to 10 trading days, and the overall process of inquiry issuance and listing has been reduced from 17 trading days to 15 trading days.
According to data from the Beijing Stock Exchange, after the release of the "19 Measures for Deepening Reform", approximately 67000 new qualified investors were added to the Beijing Stock Exchange, of which nearly 98% came from investors on the Science and Technology Innovation Board, and all 27 securities firms added qualified investors to the Beijing Stock Exchange from the Science and Technology Innovation Board. At the same time, various securities firms have actively launched the "one click access to the Beijing Stock Exchange" function, facilitating investors to open accounts. The number of account openings for each securities firm has increased significantly, with Huatai Securities adding nearly 10000 new accounts per day. Wang Li, Deputy General Manager of the Beijing Stock Exchange, recently stated to the public that the exchange has at least 4 million incremental investor opportunities.
Not only is it the enthusiasm for new investment, but the changes in the trend of the Beijing Stock Exchange 50 Index also reflect the changes in investor confidence.
On the first trading day after the release of the "Deep Reform 19 Measures", the Beijing Stock Exchange 50 Index opened high with a 3.62% increase and continued to rise in volume, with a maximum increase of 7.57%. It then fluctuated sideways and closed up 5.92%, the highest value since the establishment of the Beijing Stock Exchange 50 Index. The transaction amount on that day was 3.505 billion yuan, ranking fifth since the opening of the Beijing Stock Exchange.
In terms of individual stocks, 217 stocks experienced a long-awaited general rise on the same day, with all stocks in the red for a long time. Longzhu Technology imposed a 30cm daily limit up, while Wuxin Tunnel Equipment touched the limit up. At the end of the day, three stocks rose more than 25%, ranking among the top three in the Beijing, Shanghai, and Shenzhen stock markets. Another 10 individual stocks rose by more than 10%, 58 individual stocks rose by more than 5%, and only 2 individual stocks closed with a decline of no more than 2%.
According to Wind data, in the first half of this year, including stocks that were traded normally and suspended, the Beijing Stock Exchange saw an average daily increase of 72 stocks and a closing of 17 stocks; After entering the second half of the year, the daily average number of rising companies on the Beijing Stock Exchange increased to 79, while 21 companies remained flat; Since September, the number of companies with an average daily increase in stock prices on the Beijing Stock Exchange has continued to increase to 82.
The trend of new stocks shows a polarization of two to eight
The latest updated data from the Beijing Stock Exchange shows that a total of 220 companies have successfully listed on the exchange, with a total share capital of 29.942 billion shares and a total market value of 262.165 billion yuan; Among them, the circulating share capital is 15.646 billion shares, and the circulating market value is 13.6185 billion yuan.
At present, listed companies on the Beijing Stock Exchange are mainly concentrated in industries such as mechanical equipment, power equipment, basic chemicals, automobiles, pharmaceuticals and biology, computers, electronics, etc. In terms of market value, listed companies in power equipment and mechanical equipment account for the largest proportion, with 29.6% and 12.7% respectively.
From the stock price trend of new stocks, it can be seen that in recent times, new stocks on the Beijing Stock Exchange have shown good returns on their first day of listing. According to statistics, since the second half of 2023, the average first day stock price of new shares on the Beijing Stock Exchange has risen by 42.85%, with a median of 24.18%.
Among them, Jinbo Biotechnology and Road and Bridge Information saw the highest first day increase on the market, reaching 159.69% and 128.29% respectively, all of which doubled; Tianli Composite, Liwang Shares, and Guozi Software also rose by over 50%, up 92.83%, 87.17%, and 70.48% respectively. Only three stocks, Hongzhi Technology, Wande Group, and Rising Group, closed lower on their first day of listing on the Beijing Stock Exchange, falling 14.08%, 8.73%, and 1.97% respectively.
Among them, Wande Group is the first new stock to break through since September, and also the first individual stock to break through on the first day since August 9th. In the following days, Wande Group's decline did not diminish, with consecutive declines of 9.2%, 1.76%, and 0.41%. On September 20th, at the close of the trading day, Wande Shares had fallen below 18.92% from the issue price.
Looking at a longer timeline, as of the time of writing, the average increase in the issuance price of new shares listed on the Beijing Stock Exchange in the second half of the year was 12.54%, with a median of -4.54%, indicating a more significant differentiation. Seven new stocks have achieved gains, with five new stocks increasing by more than double digits. Among them, Jinbo Biotechnology rose by 221.43%, Tianli Composite rose by 49.63%, and Road and Bridge Information rose by 38%; Nine new stocks are still experiencing breakdowns, with seven experiencing breakdowns exceeding 10%. Except for Wande Group, Haosheng Electronics has fallen 26.36% from the issue price, Hongzhi Technology has fallen 25.83%, and Huayang Racing has fallen 19.03%.
If we take the closing price on the first day of listing as the benchmark and observe the average stock price performance on the 5th, 10th, and 20th days after listing, the average rise and fall of new stock prices will become -9.65%, -15.44%, and -12.35%, respectively. As of the time of publication, after excluding four stocks that have not been listed for more than 20 days, only Tianli Composite and Jinbo Biotechnology still rose 16.47% and 1.3% compared to the closing on the first day of listing in the second half of 2023 on the Beijing Stock Exchange. Road and Bridge Information, Huayang Racing, Haosheng Electronics, and Guozi Software all withdrew more than 30%.
According to the classification of primary industries by the China Securities Regulatory Commission, based on the performance of each industry after listing, the scientific research and technology service industry, water conservancy, environmental and public facility management industry performed the best within one month of listing, followed by the manufacturing industry.
From the perspective of liquidity, new stocks on the Beijing Stock Exchange have shown a high turnover rate within the first 20 days of listing. According to Wind data, the average turnover rate on the first day of listing on the Beijing Stock Exchange since the second half of this year is 66.81%. The average turnover rates on the 5th, 10th, and 20th days after listing are 29.24%, 40.14%, and 49.96%, respectively, showing a U-shaped trend of first falling and then rising.
What characteristics will the turnover rate of all stocks listed on the Beijing Stock Exchange exhibit? According to Zhang Xia from China Merchants Securities, using a holistic approach, in recent years, the daily turnover rate of the Beijing Stock Exchange has been below 1% for most of the time. Although considering that companies with a market value of 2 billion yuan account for 90% on the Beijing Stock Exchange, the overall liquidity level of the exchange is relatively reasonable. However, compared to the 2% and 2.5% on the Science and Technology Innovation Board and the Growth Enterprise Market, the turnover rate center still needs to be improved.
Many institutions have shown an optimistic attitude towards the significance of the new measures and the development prospects of the Beijing Stock Exchange.
China Merchants Securities stated that the "19 Measures for Deepening Reform" have made important statements on accelerating the supply of high-quality listed companies, steadily promoting market reform and innovation, optimizing the foundation and environment of market development. It is a comprehensive and deepening reform of the Beijing Stock Exchange, and has significant significance for the construction of the capital market and the Beijing Stock Exchange market.
For example, in terms of turnover rate, Zhang Xia believes that the "Beijing Stock Exchange Investor Appropriateness Management Measures" released by the Beijing Stock Exchange propose that investors on the Science and Technology Innovation Board can directly open trading permissions on the Beijing Stock Exchange, which has a profound impact on the market. Within a week of policy implementation, the liquidity of the Beijing Stock Exchange has significantly increased, with over 170000 new investors opening accounts in the first week, and the turnover rate fluctuation center has increased to 1%, reaching 2.3% on September 2. In terms of daily transaction amount, before the release of the "Deep Reform 19 Articles", the daily transaction amount of the Beijing Stock Exchange fluctuated below 1 billion yuan. After the release of the "Deep Reform 19 Articles", the daily transaction amount center shifted upwards, both exceeding 1 billion yuan, and reached 3.5 billion yuan on September 2.
Feng Sheng of Zhongtai Securities predicts that with the optimization of listing time and mechanism, the Beijing Stock Exchange will usher in a new round of high-quality expansion. In the context of a relatively small overall market value, it is difficult for large funds such as public funds to enter the market. This reform, by significantly improving listing efficiency and shortening listing time, is expected to attract more high-quality small and medium-sized enterprises represented by "specialized, refined, unique, and new" and hidden champions in segmented fields to list on the Beijing Stock Exchange. As the overall market size continues to increase, it is conducive to attracting large and long-term funds to enter the market, playing a role in activating the market.
