GEM May Also Introduce A "Cooling Off Period".

The only risk that the gem subscribe to new shares is high is the financial derivatives. Before it has become a publicly traded product, it is not unnecessary to leave a "cooling off period" for the successful applicants to consider the value of Hongkong's Unlisted derivatives.

Big breakage gem highlights high risk of issuing. The author believes that starting from the interests of investors, the gem will either be released before heartache or higher price, or introduce "cooling off period", and leave investors with a few regrets before entering the listing deal.

The cooling off period is an example in the capital market. Following the announcement of a two day pre-sale "cooling off" period by the Hongkong monetary authority, the Hongkong Commission's version of the "after sale cooling season" plan has also been formally released. It has set up a five day post sale right for one year or more unlisted structural products. Two days before sale and five days after service, the period of "cooling off" in Hongkong has roughly been in line with international standards, and is expected to be implemented soon.

Some people may say that there is no "cooling off period" in Hongkong's growth enterprise market, is it? However, there is no "cooling off period" for Hongkong gem because the issuing price of Hongkong gem is relatively low, and transactions are not so active. At least, there is no need to introduce "cooling off period" at present. Shenzhen gem is not. Over the past six months, the three "high" breakage of GEM has been reaching the peak stage, namely, high issue price, high price earnings ratio, high turnover and large scale breakage. The only risk that the gem subscribe to new shares is high is the financial derivatives. Before it has become a publicly traded product, it is not unnecessary to leave a "cooling off period" for the successful applicants to consider the value of Hongkong's Unlisted derivatives.

Since the launch of the gem, the price earnings ratio has increased by 50 times, 60 times and 70 times, and the highest has reached 126.67 times. However, the growth of enterprises can not support such a high price earnings ratio. According to the data collected by financial statistics, the net profit of the gem in the first quarter of this year increased by 16.4% compared with the fourth quarter of last year, while the growth rate of the main board reached 24.7%. The growth rate of the growth enterprise board actually ran out of the motherboard. Was it not a strange thing? In fact, the high price and high price earnings ratio issued to the issuer brought a high raise, but the issuer did not know how to use these extra funds. So what is the return of investors to the gem that leaves high growth support? This is one of the reasons why the growth enterprise market needs a "cooling off period".

The investment banks and sponsors of securities firms try hard to raise the issue price because the more the issuers raise, the more they can get the sponsorship fees and underwriting fees. The price quoted by the inquiry organization is based on the face of the investment bank rather than its own valuation, because the share of the allotment they sell is linked to the offer rather than their own recognition. Here, the issue of price is not the rule of value and the principle of return on investment, but the rules of interest. In the face of these shady common interest mechanisms, investors are doomed to be "three high" bubbles. This is also a very important reason why the growth enterprise market can not help without "cooling off period".

The reason why the gem needs a "cooling off period" is that the "hide and seek" of further reform of the IPO mechanism tells people that the perfection of the market restraining mechanism that people eagerly anticipate is just empty talk. In fact, according to some people's opinion, though "breaking" seems to be a kind of market restraint mechanism, when flood is put downstream, it is not the field of itself that is submerged, but the field of others, who can not restrict the problem. Let investors and future new issuers pay for the current unreasonable issue of new shares, which, in any case, can not be said to be a positive market restraint mechanism. At the very least, it is just a subterfuge of regulatory omission. In fact, since the way to raise the issue of price earnings ratio is regarded as the best way to break the myth of "unbeaten new stock", the "break" can also be regarded as the goal of the IPO reform. That is to say, the so-called IPO reform is nothing more than a game of taking investors as the imaginary enemy to try to teach investors. To this end, if the parties concerned can even ignore the market failure of the market function, who will be able to identify the new reform of the IPO and what is the return function of the capital market as a public investment channel?

The "cooling off period" is the right to regret for the protection of buyer's rights. Generally speaking, after entering the circulation transaction, the stock has no regrets to eat. However, the present situation is that there are too many unpredictable risks when the gem stock is not only listed, but also when it is issued, there are more uncertain factors from the issuer itself, so it is very necessary to set up the "cooling off period". With the "cooling off period", once investors find that the stocks they subscribed may have problems, they will still be able to withdraw their purchase orders or liquidate them to avoid risks. Instead of being like this, even after the issuance of new shares, they will not be able to get on the market, or if they know they are going to be listed, they will be able to catch up.