Secret Interest Chain: Black Market Value Management Of Bottom A Shares

? ? ? ? ? Ye Fei, a former private-equity tycoon, revealed that he was in charge of Pan Fang, Zhongyuan home (603709. SH), St Huayu (601020. SH), Oriental fashion (603377. SH), weixinuo (002387. SZ), Haozhi electromechanical (300503. SZ), Longji machinery (002363. SZ), Jinchuang group (603680. SH), farantech (603966. SH), Xiangxin Technology (002965. SZ) and *St Zhongying (002464. SZ) and other companies on the crest of the storm, the stock price fell into the quagmire of falling endlessly.

Although related companies have announced that they have denied participating in the "market value management" of Ye Fei's explosion, they have not received obvious results in calming down the market panic.

At the same time, China Securities Regulatory Commission (CSRC) has also continued to state that it will hold a "zero tolerance" attitude towards market manipulation and insider trading in the name of market value management, and has decided to file an investigation into the suspected manipulation of stock prices of Litong electronics and Zhongyuan home furnishing.

At the close of May 19, some Ye Fei concept stocks showed signs of stopping falling and stabilizing. However, the shares of some companies involved continued to fall sharply. Zhongyuan home furnishing Co., Ltd. fell 2.64%, frantech fell 2.34%, and * ST Zhongying fell 5.23%. Oriental fashion was more direct in the end of the market.

For a time, "market value management" has become the "abscess" that everyone in the capital market can avoid.

Market value management of cancer

In fact, "market value management" is not a great disaster.

The concept of market value management originated from the reform of non tradable shares of Listed Companies in 2005. After the share reform, the difference between the circulation system of non tradable shares and tradable shares is gradually eliminated. The original non tradable shares are converted into restricted shares, which can be listed and circulated after the expiration of the restriction period.

Since then, the interests of large shareholders and small and medium-sized shareholders of listed companies have begun to converge. The rise and fall of stock prices and the rise and fall of market value gradually affect the large shareholders and management of the company. How to achieve the internal value of the enterprise through reasonable and effective market value management and show it in the market value has become an important topic in front of all listed companies.

"Common behaviors in the current capital market, such as the increase of large shareholders' holdings, share repurchase, equity incentive, private placement, merger and acquisition and reorganization, are the means of market value management." On the other hand, the purpose of market value management is not only to raise stock prices, but also to help listed companies stabilize their control rights, prevent hostile acquisitions, or reduce financing costs.

All along, regulators have been supportive of true market value management.

At the beginning of 2014, a large number of large state-owned listed companies' share prices fell below net assets per share. Under such a background, some commercial banks and central enterprises were convened to discuss the feasibility and market demand of market value management by repurchase common shares. In March of that year, China Securities Regulatory Commission also called on listed companies to pay attention to market value management, hoping that listed companies with confidence and ability to maintain their market value by repurchase shares in the market downturn.

After that, in May 2014, the State Council issued several opinions on further promoting the healthy development of the capital market (also known as the "national nine articles") in the industry, which clearly proposed "encouraging listed companies to establish market value management system" in the section of "improving the quality of listed companies". Market value management is formally written into the programmatic document of the top-level system design of the capital market.

However, with the development of capital market, "market value management" has gradually changed.

Just in the year of the promulgation of the "nine articles of the people's Republic of China", China Securities Regulatory Commission (CSRC) reported 18 cases of suspected market manipulation, including many cases of price manipulation under the banner of maintaining stock prices and managing market value.

"The earliest is the emergence of a lot of PE collusion with listed companies of pseudo market value management behavior." According to a person in charge of private equity institutions in Beijing, IPO public offering was suspended in 2013, and PE institutions were limited to exit. However, at the same time, private placement, M & A and restructuring of listed companies have emerged as a result“ Many PE institutions began to enter the primary and half market, even the secondary market. "

According to the person in charge of the private placement agency, this kind of pseudo market value management often involves PE institutions holding shares of listed companies and listed companies to set up merger and acquisition funds to follow the trend or blindly speculate on the subject matter. However, there is no substantive planning in fact. It only raises the share price of listed companies from the news, and PE institutions carry out speculation and arbitrage during this period.

Tian Lihui, President of the Financial Research Institute of Nankai University, said that market value management is a kind of strategic management behavior of listed companies based on public information and fair value, comprehensively using a variety of scientific and compliant value management methods and means, such as buyback and additional issuance, in order to realize the optimization of company value. Market value management can prevent excessive deviation of stock price from value, which is the protection for investors in the context of information disclosure.

Market manipulation is a kind of behavior that makes use of the advantages of capital and information and uses improper means to artificially create securities market, manipulate or affect the price of securities market, so as to induce securities investors to buy and sell securities blindly, so as to seek benefits for themselves or transfer risks. Market value management is in compliance with the law, and market manipulation is illegal. Although they are both trading stocks, there is a clear distinction between them.

While drawing out the "market value management" black industry chain, it also implies the possibility of profit transmission. Standing cool Hailuo

Black interest chain

With the vigilance of China Securities Regulatory Commission to the "PE + listed companies" investment mode, the related pseudo market value management behavior gradually faded in the domestic capital market. This time, ye Fei has exposed a new format of "market value management" in recent years.

Before that, some securities companies have analyzed two models of pseudo "market value management". One is the bulk dealer model, in which the bulk dealer first drives up the stock price in the secondary market, and then the shareholders sell the stock to the dealer through block trading, and the dealer then sells the stock later. Both sides share the benefits. The second is the private fund model, that is, the private fund first establishes a position in the secondary market, during which the listed companies cooperate to send bad news to lower the stock price. Subsequently, private equity funds pulled up the share price, and the listed companies cooperated to issue good news. In the process of stock price rising, private funds gradually sell stocks. Both sides share the benefits.

As early as 2016, China Securities Regulatory Commission (CSRC) investigated and dealt with the first case of "price manipulation by using information advantages". The actual controller of Hongda new materials, a listed company involved in the case, conspired with Shanghai Yongbang Investment Co., Ltd., a private placement organization, to manipulate the stock price of HTC new materials by using information and capital advantages.

From ye Fei's revelations, we can find that his so-called "market value management" is also mixed with the two major elements of public funds and securities companies' asset management.

Specifically, by the intermediary and listed companies to determine the amount of investment and other transaction details, listed companies with good news to pull up the share price. At the same time, the investors buy stocks to lock their positions, so as to reduce the circulating chips, reduce the selling pressure when the stock price rises, and reduce the later resistance of the management to the stock price operation. Finally, the income of shareholders' cash out of the listed company will be distributed with the management in proportion.

"In fact, it's commonly known as" carrying a sedan chair ". However, ye Fei's disclosure mentioned that public funds and securities companies' asset management also participated in market manipulation, which greatly shocked the market. While drawing out the "market value management" black industry chain, it also implies the possibility of profit transmission. " Some senior investors in Shanghai said.

"This kind of" market value management "is indeed a business that has been tacitly known for a long time. The process I've heard of is relatively simple. First, the major shareholders of listed companies transfer the company's shares to private equity institutions through block trading, and the funds obtained from the reduction of holdings are also given to them for subsequent price promotion. Then, the listed companies release some good news and cooperate with the funds in private placement to make market value together. " A person in charge of the business department of a securities company said that there were public funds and securities companies' asset management involved in the disclosure, and perhaps there was a need to increase product performance by manipulating stock prices.

In addition, the Secretary of the listed company disclosed to the reporter of the 21st century economic report that when the share price of his company was low, he also considered "market value management" and issuing merger and reorganization news to achieve the effect of raising the stock price“ At that time, the management didn't think about arbitrage. They just wanted to make the stock price look better. If there was capital, the efficiency would be higher. Fortunately, the management was conservative and didn't implement it. Actually, the management has already found it. "

Small value companies become disaster areas

It is worth mentioning that ye Fei also mentioned that the "register of shareholders" of listed companies is the key to the implementation of relevant "market value management".

In 2018, China securities registration and Clearing Co., Ltd. (hereinafter referred to as "CSDC") issued the "detailed rules for the implementation of the register of securities holders" officially began to implement. According to the regulations, the CSD shall provide the list of the top 200 shareholders and the list of the top 100 shareholders according to the size of the circulating securities on the 10th, 20th and last trading day at the end of each month.

"Under other circumstances, such as holding a general meeting of shareholders, refinancing, etc., leading to changes in share capital and abnormal stock price trading, listed companies can also apply to see the register of shareholders." Said the Secretary of the board of directors of the listed company.

In contrast, ordinary investors can only get a glimpse of the changes of shareholders when the listed companies disclose their reports every quarter, and it has been at least one month since the end of the last quarter when the report is released.

"Even if they don't take the initiative to apply, the trader looks at the top 200 shareholders every 10 days, and then calculates the other party's position cost through the average price of 10 days, which is equivalent to playing cards and peeking at the cards. In the process of pulling up the share price, the shareholders' register also facilitates the traders to confirm their own size of control, thus determining the selling time. " The senior investors explained that this is also the reason why all the stocks exposed by Ye Fei are small cap stocks. With the help of the register of shareholders, the management can control individual stocks more quickly and accurately.

According to the statistics of 21st century economic report, all the 10 A-share listed companies that ye Fei claims to be involved in "market value management" are all small cap stocks in the market, and their liquidity is flat.

Among them, except for the circulation market value of vicino and Oriental fashion reached 11.3 billion and 7.3 billion respectively, the circulation market value of other stocks was less than 3 billion yuan, and the market value of * ST Zhongying circulation was less than 900 million yuan. In terms of liquidity, according to wind data, the average turnover rate of four stocks in the past week was less than 2%. The average turnover rate of Haozhi electromechanical was only 9.17%.

As for the possible manipulation of stock prices by using the "register of shareholders", some close regulators have said that they have violated the newly revised Securities Law. Specifically, the new securities law stipulates that securities trading places, securities companies, securities registration and settlement institutions, securities service institutions and their staff shall keep the information of investors confidential according to law, and shall not illegally trade, provide or disclose the information of investors.

However, the new securities law clearly stipulates that securities registration and clearing institutions should also provide securities issuers with lists of securities holders and relevant information“ It is a legal obligation for a registration and settlement institution to provide a list of securities holders to a listed company. " However, those close to the regulator also said that at present, the regulatory authorities have noticed the possible problems in the relevant system of "shareholder register".

Tian Lihui further pointed out that listed companies need to know their own shareholders more frequently in order to prevent malicious M & A and market manipulation. But at the same time, shareholders should also have the right to request the disclosure of information such as the register of shareholders to the listed company. He suggested that China should further promote information disclosure, promote intelligent supervision, and prevent market manipulation in the name of market value management.

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