Securities Times reporter Tan Chudan Liu Yiwen
It has been more than half a year since the implementation of the new regulations on IPO inquiry. With the increase in the number of new shares breaking, all parties in the market are paying more attention to the importance of "pricing power" and "new stock research".
The Securities Times reporter made statistics on the recent issuance of registered new shares with a price-earnings ratio of more than 90 times, which is much higher than the industry average price-earnings ratio, and found that among the extreme quotations, there are many top public funds, tens of billions of private funds, insurance funds, and foreign institutions.
In the opinion of many industry insiders, although the new regulations on IPO inquiry have been implemented for a long time, there is still a phenomenon of "brainless new" in offline inquiry.
There are many factors behind this. For example, the thinking of being shortlisted for the blog has not changed, and some fund companies still use the "qualification rate" for assessment, which has led to the high price of the institutional blog after winning the lottery.
Some people also believe that there are still insufficient research on new stocks, especially small buy-side institutions do not have enough research strength.
At present, the number of institutions participating in the price inquiry offline has hit a new low, reflecting the game of market participants, which is also the result of the market's spontaneous adjustment.
It is understood that some inquiries have temporarily withdrawn because they do not have the ability to research new stocks. Once the market improves, they may “follow the trend and launch new ones”.
It is worth noting that the phenomenon of "breaking hair" in new stocks has attracted the attention of regulators.
Recently, the Shanghai Stock Exchange organized a number of securities companies to hold a symposium to discuss the current market "break" phenomenon.
The Shanghai Stock Exchange emphasized that all lead underwriters should prudently write investment value reports in accordance with the requirements of the Association's regulations, fully carry out investor roadshow communication, enhance market risks, manage issuers' valuation and pricing expectations, and rationally plan fundraising projects. After considering industry and underwriting risks, prudently determine the issue price.
In the next step, consider incorporating indicators such as a large percentage of breakouts into the evaluation of the quality of practice of lead underwriters.
Who still bids high after a break?
People from the capital market department of a number of securities firms told the Securities Times reporter that in the past six months, the thinking of some inquiry institutions has not completely changed, and they must fight every new issue, and the emphasis on new stock research has not increased significantly.
Data shows that the wave of new shares broke in January this year. At that time, 25% of registered new shares broke on the first day of listing.
In the first three weeks of March (1st to 25th), 35% of registered new shares were listed on the first day of listing.
The market is sluggish, and the risk of breakout has increased significantly. More than 30% of the first-day breakout effects of listing do not seem to be fully transmitted to the primary and semi-market.
Among the new stocks that started the IPO work on March 28, there are still price inquiry agencies that have quoted extreme prices, which is puzzling.
Take a recently listed new stock as an example. The issue price was more than 20 yuan, but some institutions reported a high price of more than 100 yuan offline.
Another new stock issue price is in the early 100 yuan, and 10 inquiry agencies have given a high price of more than 200 yuan.
Securities Times reporters selected observation samples-the IPO was started from March 28 to April 12, and a total of 7 registered new shares were issued with a price-earnings ratio of more than 90 times and much higher than the industry's price-earnings ratio.
During the inquiry process of these 7 stocks, the quotations of a head fund company and a large fund company in southern China were included in the "high price exclusion" 3 times.
There are two life insurance institutions located in Beijing that have repeatedly appeared in the "high price exclusion" list.
In addition, two private equity firms with a scale of 10 billion yuan and an asset management company of a foreign-funded institution in Shanghai have also been included in the "high price exclusion" list for many times.
Multiple factors lead to "no brain quotes"
This year, under the circumstance of obvious expectations of breakage, why are there still so many institutional investors with high quotations?
"I think that the thinking of some inquiry agencies may not have changed, and they are still stuck in the inherent mode of being shortlisted in the past. If this phenomenon exists, high prices will be quoted in order to be shortlisted," said the person in charge of the capital market department of a large securities firm.
Some investment bankers said that some inquiries have lack of pricing power and have a free-rider mentality. Since only 1% of the high price of the new shares in the inquiry is excluded, if other institutions quote the price lower, then it does not matter if they report the high point, and the final subscription is made. Still at the issue price.
Another person from the capital market department of another leading brokerage holds the same view, saying that most inquiry institutions are "brainless".
He asked the reporter, "If offline institutions spend time researching IPOs and make quotations with valuable judgments, but in the end they have to compete with other institutions for the winning rate, why is he motivated to do IPO research?"
On the one hand, the lack of professional IPO research capabilities is on the one hand, and on the other hand, the inquiries are internally assessed based on the "qualified rate". In the current period of normalization, whether the assessment of this indicator is still applicable needs to be re-examined.
A person from a medium-sized brokerage introduced the buyer's internal quotation mechanism to reporters. Long before the reform of the new inquiry regulations, many institutions' assessment of new products was the "quote shortlisted rate".
At that time, the new shares made steady profits, and the entry rate was directly linked to the income.
Now that the new stock market has broken, there are still institutions that continue to assess this indicator, which affects the staff responsible for quotation to a certain extent to report the price higher.
The relevant person in charge of the issuance of Shenwan Hongyuan added that although a break will lead to some losses, institutional investors will consider the overall rate of return of the product. Since the amount allocated to each new share for each product is relatively low, the break will have a negative impact on the product’s performance. Overall yields have little impact.
Comprehensive consideration, in the face of the two important assessment indicators of the shortlisted rate and the rate of return, institutional investors will still tend to quote high prices to be shortlisted.
When some inquiry institutions do not have the ability to research new stocks, the seller's bid report becomes an important reference for the quotation of inquiry institutions.
New stock research becomes a "scarce product"
So, will the high proportion of new shares break the market will cause institutions to pay attention to the research on new shares?
Will the new strategy change?
In this regard, many industry insiders believe that theoretically, research should be increased, but many institutions do not have enough research capabilities for new stocks.
The above-mentioned person from the capital market department of the leading brokerage said that from the current action of the inquiry agency, the so-called quotation strategy change is "not participating in the new stock market, rather than taking some time to study the new stock and quote a reasonable price."
It is understood that the number of institutions participating in price inquiries offline for registered IPOs has hit a new low. There are about 250-320 inquiries, compared with more than 500 in the previous peak period.
A person from the capital market department of a medium-sized securities firm in Shenzhen said, "Many inquiry institutions do not have the ability to research new stocks, especially small buy-side institutions that do not have research capabilities. Now that the market is not good, they simply do not launch new stocks." In his view, Whether it is before or now, it is hard to say how reasonable the pricing of IPOs is and whether it can reflect the real situation of the company.
The person in charge of the research institute of a medium-sized securities firm told reporters that, based on the new product yield rate, after the new regulations on price inquiry, fund companies with strong research capabilities will have a higher rate of return for new products, which also reflects the current new stocks from the side. The inquiry mechanism puts forward higher requirements on the research pricing ability of institutions.
He believes that the breakout of new shares has affected the enthusiasm of institutions to participate.
In particular, it has a greater impact on absolute income funds such as insurance funds and "fixed income +" funds, and the proportion of their participation in new sales has dropped significantly.
If the IPO market continues to cool, funds may be further withdrawn to fight IPOs.
From the buyer's point of view, He Jinlong, general manager of Umily Investments, said that the current inquiry institutions need to conduct independent research and independent quotations for new stocks, and should consider the pricing requirements of "the lower of the four values", internal games, and the finalist range. tend to be rational.
Inquiry institutions should study more about the fundamentals and growth of listed companies and their industries, and carefully consider new listings and inquiries.
An asset manager of a securities company in East China told the Securities Times reporter that inquiry agencies do need to increase their research on new stocks, but in fact, many institutions do not have so many people to cover new stock research, which requires a lot of time and cost.
It is expected that the new boom will gradually fade in the face of the current market environment.
Hu Bo, manager of Rongzhi Investment Fund, a subsidiary of private equity Pai Pai.com, said that the new strategy is still a better strategy from the perspective of statistics and probability distribution.
"The risk of private placement to obtain new returns from a single bond has increased. Strategically, the overall average return on new shares should be obtained by actively participating in new shares. For price inquiries, it is still necessary to make reasonable estimates based on the fundamentals of listed companies. If you bid too high, you can easily be penalized by the market.”
For the current IPO inquiry market, underwriters, as intermediaries, should demonstrate professional valuation and pricing capabilities, for example, to further play the role of the "anchor" in the issuance pricing of the bidding report.
However, some people in the industry believe that the current underwriters have failed to give full play to the professional valuation and pricing role in the pricing process, and some underwriters are even suspected of maliciously raising prices.
The aforementioned person from the capital market department of a medium-sized securities firm in Shenzhen told reporters that at present, the inquiry agencies do not know much about new stocks, especially for emerging industries on the Science and Technology Innovation Board. However, bid reports tend to listen to the issuer, so the investment advice given actually has some water in it.”
Adhere to market-oriented reforms
Regarding the phenomenon of irrational quotations in the current IPO inquiry, industry insiders suggest that the system can be optimized from multiple aspects.
The aforementioned person from the capital market department of the leading securities firm believes that the independent placement rights of securities firms should be introduced, which can encourage fund companies to invest corresponding resources in new stock research to a certain extent.
Taking Hong Kong's IPO underwriting system as an example, the lead underwriter has a greater right of independent allocation in terms of independent placement to professional investors and cornerstone investors, and can classify investors by themselves and determine the number of placements.
Factors considered by the underwriters include: investor conditions, quotations and participation in roadshows, past investments or strategic partnership with the underwriters, etc.
The A-share IPO market has also introduced the independent placement system of securities companies, but it was later stopped due to the market's great controversy over the transfer of interests of underwriters.
Wang Jiyue, an investment banker, put forward three suggestions. First, it is recommended to revise the issuance rules, suspend the issuance if more than 30% of the online issuance or offline issuance is abandoned, and then choose an opportunity to issue to increase the secondary market's market constraints on new stock issuance.
Secondly, it is recommended to exclude 1% of the high price and adjust it to exclude extreme quotations, such as excluding quotations that are 30% or 50% above and below the median quotation of all institutions. Of course, you can also exclude only the high-priced part, and then calculate the four-digit range and set the price .
Finally, it is suggested that institutions that have made multiple extreme quotations should be considered as incapable of quotation, included in the blacklist of offline inquiry institutions, and restricted from participating in offline quotations for a period of time.
In fact, people in the industry generally believe that the market-oriented reform has achieved a phased victory, and the next reform must be determined and continue to adhere to the direction of market-oriented reform.
The relevant person in charge of the issuance of Shenwan Hongyuan said in an interview with a Securities Times reporter that a break in the issuance is a normal phenomenon of the marketization of new stock issuance, and it needs to be viewed correctly and rationally.
The direction of market-oriented reform should be adhered to and unswerving. In view of the development history of my country's capital market, necessary supervision is indispensable. It is recommended that the regulatory authorities can issue relevant policies in a timely manner.
The aforementioned head of the capital market department of a large securities firm analyzed to reporters that the current stock break is not a general break, but a break of a specific stock in a specific industry. This is the market mechanism at work and the result of the market's spontaneous adjustment.
"It should be said that it is not easy for the reform of the new stock inquiry system to reach this stage, and there has been considerable progress in marketization. The reform needs to be determined, move forward in the direction of marketization, and let the market gradually mature."