28 Billion Banking Stocks IPO Introduced The Green Shoe Mechanism To Exceed 60% Bank Shares, "Breaking The Net" Issued The Market Bottoming Signal?

After Zhejiang Merchants Bank returned to A shares net fund-raising 12 billion 400 million yuan, postal savings bank will return to A shares, net fund-raising is expected to reach 28 billion yuan.

However, the first day of Zhejiang IPO's "break" and 2/3 listed bank stocks were "broken", which also made the market worried about the listing of banks.

Since the second half of 2019, there have been some changes in the ecology of A shares. 11 of the 173 new shares have broken down this year, 6 of which have broken since the opening of the board in August, and 3734 listed companies in the whole market, excluding 35 stocks with negative net assets and 373 listed companies.

On the evening of November 28th, the postal savings bank disclosed that the number of effective online purchase households was 8 million 882 thousand, and that the number of households receiving the purchase of other new shares declined considerably. Previously, Zhejiang Merchants Bank and China branch had 10 million 970 thousand households and 11 million 790 thousand households. After the callback mechanism was launched, the winning rate on the Internet was 1.2591%, which was the highest since the implementation of the credit purchase system in 2016. The highest success rate was 0.688% of Zhejiang Merchants Bank.

The postal savings bank proposes that the green shoe mechanism will be set up for the A share listing of the bank. Within 30 days after the issuance of new shares, if the share price is lower than the issue price, there will be a green price of 4 billion 300 million yuan for the admission of green shoes.

"Big Mac" will change the pattern of capital market. As one of the six largest state-owned banks, the total assets of postal savings bank are 10 trillion yuan, second only to the four largest banks, and the total market value of Hong Kong stocks is HK $411 billion 600 million, ranking behind five major banks and China Merchants Bank.

On the one hand, the market generally believes that the green shoe mechanism, stock price stability commitment and high proportion strategic placement have a stabilizing effect on IPO issuance. On the other hand, respondents believe that in addition to historical reasons and economic cycle fluctuations, large-scale fragmentation is also seen as one of the signals that the market bottoms out.

On the first day of Zhejiang IPO, the "break" and the 2/3 listed bank stocks were "broken", which made the market worried about the listing of banks. - Song Wenhui diagram

Postal store IPO introduces green shoe mechanism

After the "break" of 601916.SH, 2016.HK A shares IPO, the market was worried about the postal savings bank (601658.SH, 1658.HK) IPO.

In November 27th, the postal savings bank held an initial public offering A share online investment conference. For the recent stock market issue of IPO, Jin Liang, general manager of China Post Group and chairman of postal savings bank, said that the "green shoe" mechanism was set up in the A stock listing of postal savings bank.

The fifteenth regulation of securities issuance and underwriting management revised by the securities and Futures Commission in 2018 stipulates: "if the number of initial public offerings exceeds 400 million shares, the issuer and the main underwriter may use the option of excess placement in the issue plan." The "allotment option" is referred to as the "green shoe" mechanism.

The postal savings will be issued 5 billion 172 million shares, accounting for about 6% of the total share capital issued. If the green shoe is exercised in full, the total number of shares will be expanded to about 5 billion 948 million shares, representing about 6.84% of the total share capital issued.

"In the history of A shares, only three companies, including ICBC, ABC and Everbright, have introduced" green shoes "in order to deal with market fluctuations in the issuance process. The price of green shoes has been performing well during the exercise period, and the average share price has risen by more than 10%. At the investment exchange meeting, Zhang Jinliang said that the bank also introduced a strategic placement mechanism, set up different locking periods, and made stable share price commitments, providing support for the stability of the future market.

Huang Zhaohui, managing director of CICC, said that the introduction of green shoes to stabilize the two tier market prices, which is the recent issue of bank stocks do not have. Yu Xiaojun, deputy general manager of China Post securities, said that within 30 days after the IPO was issued, if the share price was lower than the issuing price, 4 billion 300 million yuan of green shoe funds would enter the market to stabilize the price.

The introduction of green shoe mechanism is related to the pressure of bank stock prices.

As of November 29th, the postal savings bank H shares closed at HK $5.08, down 1.17% on that day, and the P / E ratios and the net market rates were 7.2 times and 0.73 times respectively; the postal savings bank H shares rose 29% this year.

The Zhejiang Commercial Bank, which has just completed the A share listing, has fallen below the issue price for 4.94 yuan on the first day. By the end of Friday November 29th, Zhejiang Commercial Bank A shares and H shares were closed at 4.70 yuan and 4.32 Hong Kong dollars respectively, corresponding to the market rate of 0.91 times, 0.87 times, and the A/ H-share premium was 1.21.

A Hong Kong stock analyst said that the A/H share price was relatively large, which is one of the pressure sources of the recent break of new shares of Chongqing Agricultural Bank and Zhejiang Commercial Bank. The IPO listing of state-owned enterprises can not issue new shares at a price lower than the net assets of each share, otherwise it will be suspected of losing state assets. If listed in the "broken net" state, large listed stocks need underwriters to stabilize their share prices.

Bank stocks cracked net

In fact, banks' profits have hit a new high this year when bank stocks are generally "broken".

"Bank profitability is stable, absolute net profit is still very impressive, earnings per share stable." In November 28th, Dong Deng, director of the financial and Securities Research Institute of Wuhan University of Science and Technology, said that the reason for "breaking the net" was: Historically, bank shares were priced relatively low, bank capital and market capitalization were too large, and compared with "losses" under the investment style dominated by individual investors. Two, the current downward pressure on the economy has certain impact on the market trend, and the capital market is still at the bottom stage.

There are 34 listed banks in A shares. In November 28th, 24 banking stocks broke, accounting for over 2/3. The lowest net market rate is 0.57 times that of Huaxia Bank, and the net rate of traffic, livelihood, Beijing, Bank of China and CITIC is also less than 0.7 times.

The five major state-owned banks in the establishment of diplomatic relations between the workers and peasants were completely broken. The highest net market rate is Ningbo bank and China Merchants Bank, which are 1.8 times and 1.6 times respectively.

"The endogenous growth of banks is actually improving, and the core profit, bad and provision are improving." A brokerage analyst in Southern China said that the reasons for the failure of bank stocks were largely outside their own. From the regulatory data, banking profits have declined overall, but the profits of listed banks are improving.

It believes that this reflects that market expectations are still pessimistic. Two, some large banks are undertaking small and micro functions, and assistance to small and medium-sized banks, and the market is concerned about the quality of their assets. At the same time, the "Matthew effect" of banks gradually emerged, and the profitability and risk control level of large banks, head joint stock banks and city commercial banks began to stand out.

Breaking the net also makes listed banks continue to take measures to stabilize stock prices, or buy or increase shares by major shareholders or executives.

Since 2019, at least 8 banks have announced measures to stabilize stock prices. The banks of Hangzhou, Chengdu and Guiyang have been implemented, and the stable stock price measures of Su Nong, Wuxi, Shanghai and Jiangyin banks are still being implemented. The Bank of Changsha has stabilized its share price measures.

In addition, there are 11 bank stocks in the 50 constituent stocks of the Shanghai Composite Index 50. As of November 29th, 18 constituent stocks were broken, of which 9 were bank shares, and other energy stocks such as steel, construction and China Shenhua.

For banks, supervision through the MLF interest rate to guide the LPR interest rate downward, reduce the real economy financing costs, bank debt costs in the short term difficult to downlink, will bring some pressure to net interest margin, economic downlink pressure also causes asset quality decline worry. The rest of the stocks are mainly real estate, steel and coal, which are related to overcapacity and direction of industry regulation.

"Every time" the darkness before dawn "is a broken high hair period, and it is also one of the signals that the market bottoms out. Dong Deng said that not only banking stocks were broken but also real estate, mining, building materials and so on, which is related to the industry cycle and the stage of economic cycle.

He believes that since 2015, the bear market cycle has lasted 5 years, "to the extreme", is now close to the end of the cycle. In addition, next year will be a year of building a well-off society in an all-round way, and the people's livelihood index will also increase significantly.