Why Does Preferred Stock Become A "Hoax"?

Speaking of preferred stock, it is between stock and bond, and is regarded as a manifestation of financial innovation.

However, because the concept of preferred stock is rarely mentioned in China, so far, the issue of preferred stock has not been touched upon in the company law and the securities law.

In recent years, the concept of preferred stock has been gradually taken seriously.

This year, our country has done a lot of work in promoting preferential shares.

In April 24th this year, Guanghui energy officially announced that the company intends to issue no more than 50 million shares of preferred stock, raising funds not more than 5 billion yuan, and the plan for Guanghui energy non-public offering preferred stock officially opened the prelude to the preferred stock in the A share market.

Subsequently, Chinese construction also won the first list of preferred shares of central enterprises. It intends to issue preferred stock to no more than 200 investors who meet the prescribed requirements, with a total amount of not more than 30 billion yuan.

In fact, the enthusiasm of listed companies for issuing preferred shares is quite high.

According to incomplete statistics, since the end of April this year, many listed companies have issued preferred stock issuance programs, and the total amount involved is quite alarming.

Among them, preferred stock issuance is most active than listed bank shares.

At present, 6 banks have issued preferred stock issuance plans.

According to the statistics, the Shanghai Pudong Development Bank issued 30 billion preferred shares, the Agricultural Bank issued 80 billion preferred shares, the Bank of China jointly issued 100 billion preferred shares, the Industrial Bank issued 30 billion preferred shares, the Ping An Bank issued 20 billion preferred shares, and the ICBC issued 80 billion preferred shares. The listed banks jointly issued a scale of up to about 340000000000 yuan.

There is no denying that listed companies have different motivations for issuing preferred shares.

However, the essence of issuing preferred shares is still inseparable from the money.

Taking listed bank shares as an example, the most important purpose of issuing preferred shares is to supplement the first tier capital and broaden the channels for capital replenishment by means of preference shares, so as to meet their own development needs.

Taking other listed companies as an example, the motivation for issuing preferred shares is even more controversial.

Among them, China's construction issue preferred stock is planned for the company's infrastructure and other investment projects, supplementary working capital for major project contracting projects both at home and abroad, and supplementary general liquidity.

The reason why the Central Plains high-speed issue preferred shares is even more ridiculous.

According to statistics, it is estimated that no more than 3 billion 400 million yuan will be raised, of which 2 billion 600 million yuan will be used to repay bank loans and other interest bearing liabilities, while the remaining 800 million yuan will be used to supplement liquidity.

The purpose of the preferred stock is to enhance the financial innovation ability of the capital market and enrich the financial innovation tools in the capital market.

However, when preferred stock is applied to practice, it becomes a disguised refinancing tool.

In the eyes of ordinary investors, it is more like a "hoax".

According to the regulations, ordinary investors are involved in the preferred stock market, which needs to meet the conditions of the size of the assets of not less than 5 million yuan.

It can be seen that a small number of investors can meet this precondition in the A share market dominated by individual investors, but the vast majority of investors do not have access to the preferred stock market.

In addition, ordinary investors can not only enter the preferred stock market to get relatively high yield, but their general shareholders' profits will also be eroded by priority shareholders.

From the relevant rules of preferred stock, we know that preferred shareholders enjoy priority in dividend distribution during dividend distribution.

However, before the preferred shareholder fails to fully obtain the corresponding dividend, ordinary shareholders shall not get the dividend distribution in advance.

At this point, in view of this regulation, if the listed companies invested by investors belong to enterprises with high growth, there is no need to worry too much about the problem of their ordinary shareholders' profits being eroded.

However, if the listed companies that investors invest in belong to enterprises that lack continuous performance growth, their general shareholders' profits will be seriously eroded.

It is worth noting that the financing cost of preferred stock is generally higher than that of bonds, which is also much higher than the average dividend yield of A shares in the past years.

In the current environment where there is no risk interest rate and high interest rates, preference shares should be set at a high dividend yield to attract investors.

In this regard, listed companies have set a relatively high dividend yield, and there is a big unknown about whether they can pay interest on schedule in the future.

Generally speaking, all listed companies that issue preferred shares are

More nervous enterprises.

However, because of the widening of the investment instruments in the market, the interest rates of all kinds of financial products have also maintained at a high level.

At this point, the issue of preferred stock by listed companies basically needs to set a relatively high dividend yield.

Usually, issue

It only needs to pay interest without paying back the principal.

In accordance with the relevant provisions, if the company loses money or the profit is insufficient, it can not guarantee that the preferred stock holders can get all the dividends payable by the company that year.

In case of relatively bad listed companies, there may be temporary non interest payments and other issues.

As a result,

The issuance of preferred shares is fully guaranteed, and preference shares also provide a good refinancing tool for listed companies.

As a result, listed companies have issued preference shares, and the preferred stock has become the most ideal tool in the capital market.

Guo Shiliang believes that the introduction of the preferred stock model can be interpreted as a symbol of the gradual maturity of the capital market.

However, if a good tool is forced to distort its function, it will be easy to change its taste, and eventually it will be injured by ordinary investors.