How To Encourage Retail Market? How To Reform The "Policy Market"?

"Retail market" and "policy market" are the institutional roots of A share "gambling culture" and "cursing culture". Fast cattle bear and short bear are unique genes in the A share market.

How to govern? This is a difficult problem to be solved.

In December 1990, China's A share market was officially opened.

In the late 1980s and early 90s, China's economy was still under the double plagued by the planned economy and the shortage economy. The private economy and private enterprises were still small in size, and the financial market was in the initial stage of development. Financial repression has been imprisoned for financial innovation and financial reform.

Under such economic background and market environment, the A share market has been deeply marked by the times since its birth: plan management and administrative control.

The A share market initially allowed only state-owned enterprises or collective enterprises to go public. This practice lasted for ten whole years until the beginning of 2001, before abandonment of this "hidden rule", allowing the IPO of private enterprises to be officially allowed.

At the same time, in order to ensure that the main position of public ownership is "not changing color", the original statute clearly stipulates that "state-owned shares" and "legal person shares" are not allowed to be pfered in circulation. This is what people commonly call "split share structure". Until 2005, it was reassigned the legal position of state-owned shares and legal person shares equally and circulately and pferable through the reform of non tradable shares.

During this period (1990 to 2001), China's A share IPO system has been implementing planned quotas and administrative examination and approval system.

The specific practice is that the annual listing index and IPO fund-raising quota are allocated according to the mandatory plan. From central to local level, the planning indicators must be decomposed through layers. The list of listed companies is recommended or provided by the local government, and the Commission will conduct substantive examination of the pre selected enterprises, and make specific arrangements for the size, price, mode and time of issuing the shares.

This practice lasted until the beginning of 2001, and the sponsor approved it and replaced it.

Thus, the birth of the A share market is constrained by the influence of the ideology of planned economy. Mandatory plans and administrative control are directly implanted into the newly established A share market, which should be the background of the generation of "A policy" market.

Against this background, the two tier market of A shares is also a strictly regulated market. The relevant regulations clearly stipulate that state-owned enterprises do not allow stocks to be speculled, and neither party members nor cadres of the Communist Party are allowed to speculate in stocks. Bank funds and insurance funds are not allowed to enter the stock market. Of course, foreign investors are also prohibited from entering the market.

At the same time, there is no social security fund and enterprise annuity in China, and even the regular public offering fund does not exist. Therefore, there are few decent institutional investors in the A share market at that time, and the "retail investors" (i.e. individual investors) become the investors' main body, which is the earliest source of A shares "scattered households".

Since then, A shares have accounted for more than 85% of retail pactions, sometimes up to 90%.

Under the "policy market + retail market" pattern, the protection of retail investors without professional knowledge and risk awareness has become the most difficult problem for regulators.

In fact, the protection of investors in the context of retail investors is a very difficult matter. However, in the name of "protecting small investors", it will further strengthen or solidify the characteristic genes of A share policy market, and eventually form a mutual kidnapping and vicious cycle between "retail market" and "policy market".

In December 19, 1990, the Chinese stock market was officially opened and the Shanghai Composite Index started at 100.

In April 13, 1992, the Shanghai composite index began to rise rapidly from around 390, and reached a record high of 1429 points by 26 in May 1992. The first bull market of A shares ended on 30 trading days, and the market soared 276%. In November 11, 1992, the Shanghai composite index returned to its original form and closed at 390 o'clock.

This is the first round of fast bull, short cattle and mad cow that the Chinese stock market has experienced since it was founded. This is a typical "flash bull": inflation is bound to collapse.

In November 11, 1992, the second round of bull market began to pull up from 390 points, to 1558 points in February 1993. The second quarter of A shares rose 300% in 3 months, followed by the advent of the big bear market. The Shanghai composite index directly hit the bottom of 325 points.

When the A share market was established for three and a half years, it ran two rounds of fast bull and short cattle. This is a rare "fast bull" and "short bull" in the world.

As the A share market is still in its initial construction period, not only the number of listed companies is small, but the market value of shares is small, and the legal person shares are not allowed to circulate, so the A share market is a typical super "pocket city" at that time. It echoes with the "retail market", and the bull market rushing headlong into the herd and the bear market rushing to disperse, resulting in the operation pattern of skyrocketing and plummeting.

In 1992, there were only 53 A share listed companies, with a total market value of only 100 billion yuan, with a total turnover of 65 billion yuan.

In 1993, a total of 124 companies completed IPO in the A share market, with a total fund-raising of 19 billion 500 million yuan. In 1993, the amount of IPO fundraising amounted to 1/5 of the total market capitalization of A shares at the end of 1992, and was equivalent to 1/3 of the total A turnover in 1992.

At the end of 1993, the total market capitalization of A shares was only 330 billion yuan, and the total turnover was only 370 billion yuan, which is not as good as today's A share trading day (about 400000000000 yuan) in bear market.

This is the small scale and carrying capacity of the A stock market at that time.

However, in the first 7 months of 1994, there were 110 A shares IPO, and the total fund-raising was only 4 billion 960 million yuan, but in the background of poor money and poor investors, the stock market fell all the way. On Friday, July 29, 1994, the Shanghai stock index went down at 333, and the total turnover of Shanghai and Shenzhen two cities was only 689 million yuan on the same day, which means that a large number of IPO had far exceeded the capacity of the "pocket" market.

On Saturday, July 30, 1994, regulators issued the "three major rescue policies": suspension and issuance of new shares during the year; strictly controlling the size of the rights issue of listed companies; and expanding the scope of the capital market.

This is the A share market after the establishment of three and a half years, the first "rescue the market" mode.

The so-called "suspension of IPO" was born under such a special market environment, which was the last resort under the background of "pocket total market value" and "super pocket tradable shares".

However, the "suspension of IPO" has been deeply labeled or branded as a "bailout". Once it has formed an inertial thinking and a dependent mentality, it will become unmanageable.

In fact, "retail market" is easy to form A share "gambling culture", and "policy market" directly forms A share "curse culture".

The A share market is a typical "retail market". Institutional investors are underdeveloped. Especially, the scale of pension and public offering funds is small, and the proportion of institutional trading is only slightly more than 10%, while the proportion of retail pactions is as high as 85%.

Investment and long-term investment ability, therefore, they are accustomed to "put all eggs in one basket" to fight short shoot and make quick money. They worship the legendary "stock god" or "gambler", superstition technology analysis, dream of catching black horse every day, catching up with them, they can not stir up large cap stocks, so they prefer to stir up small (small cap stocks), stir up new (new shares), stir fry (junk stocks), they are willing to follow the customs and follow suit, are keen on speculation and speculation, frequent fast forward and quick turnover, high turnover rate, they only care about the profits and losses of different trading days, and they only care about the profits and losses of each trading day, and they never care about the long-term investment yield. However, because individual retail funds are small and scattered, they lack a combination.

In such a stock market, they are eager for quick success and instant benefits and impatient. They do not invest in value and invest for a long time. They also do not care about the fundamentals or investment value of a company. They lack the sense of shareholders and are never concerned about or perform their shareholders' rights.

In fact, such a "short speculation" is not investment, it is only naked speculation and gambling, so the end of the short cut can only be "ten fried nine loss."

The reason is very simple: no investment cycle, where to return on investment? This is the A share "retail market" unique "gambling culture", it is also an important reason for the sharp rise and fall of A shares.

Under the "A retail market" pattern, it is easier to kidnap "policy market" in the name of retail investors or in the name of protecting investors.

Since the "three rescue policies" came out in July 30, 1994, the Chinese stock market has also fallen into the root of the "save the market" old disease and the "suspension of IPO": whenever the stock price falls sharply, investors will ask the government to "rescue the market" with one voice, forcing the regulators to "suspend IPO".

Since then, investors have instinctively equated "suspension of IPO" with "bailout".

In the three or fifty years of the western stock market, the "bail out" which only once appeared in the western stock market was often talked about by Chinese investors. As long as the market fluctuated slightly, they shouted "rescue the market", and the most direct rescue request was "suspension of IPO".

If the regulators do not agree, they will use the threat of cyber violence or abuse the chairman of the SFC, and even someone will pull banners and shout slogans to protest.

From then on, the "curse culture" of the Chinese stock market began to take root, develop its teeth, blossom and blossom, and constantly upgrade.

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