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Over 100 Companies Announce Share Reductions Since "9·24" Market Movement
Since the "9.24" new policy, the A-share market has seen a rapid surge, marking an epic trend. On October 8th, the transaction volume of the Shanghai and Shenzhen stock markets broke through 3 trillion yuan, setting a new record in the history of A-share transactions.
In this round of market movement, the stock prices of over 300 listed companies have accumulated gains of more than 50%. After consecutive significant increases, some industry-leading listed companies such as Yangtze Power (600900.SH), Industrial and Commercial Bank of China (601398.SH), Oriental Fortune (300059.SZ), and Tonghuashun (300033.SZ) have reached historical highs in their stock prices.
Against this backdrop, some people are bringing capital into the market, while others are selling stocks at high prices. According to incomplete statistics from the Economic Observer Network, from September 24th to October 10th, more than a hundred listed companies have issued announcements related to shareholders' plans to reduce their holdings. These shareholders include the actual controllers of the listed companies, controlling shareholders, senior management, and strategic investors.
More than a hundred listed companies have issued reduction announcements.
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Since the "9.24" new policy, facing the temptation of cashing out profits brought by rising stock prices, the A-share market has ushered in the first wave of shareholders' reduction tide involving more than a hundred companies.
On October 9th alone, more than 70 listed companies issued announcements related to shareholders' reduction, progress in reduction, or results of reduction.
This is a long list: Xinke Materials (600255.SH), Qixia Construction (600533.SH), Baichuan Energy (600681.SH), Wantai Technology (600745.SH), Meiyan Jiaxiang (600868.SH), Youfa Group (601686.SH), Hubei Broadcasting (000665.SZ), Longli Technology (001207.SZ), Tianshan Aluminum (002532.SZ), Xi Ce Testing (301306.SZ), Luolai Life (002293.SZ), Sichuan Gold (001337.SZ), etc.
On October 10th, more than 20 listed companies such as Kuai Ke Electronics (301278.SZ), He's Ophthalmology (301103.SZ), Yamatong (002623.SZ), Aiyingshi (603214.SH), and Dishengli (603335.SH) issued announcements related to reduction.
Issues related to reduction have become one of the hot topics of concern for investors recently. In the past few trading days, on the official investor interaction platforms of the Shenzhen Stock Exchange and the Shanghai Stock Exchange, investors have raised hundreds of questions related to shareholder reduction.
On the Shenzhen Stock Exchange's interactive platform, investors of Yinghuat (301272.SZ) suggested to the company: In view of the significant impact of shareholder reduction or stock repurchase on stock price trends, the company is advised to timely disclose the progress of stock repurchase and reduction, which will help stabilize and boost investor confidence.Since the "9·24" new policy, the stock price of this company has increased by more than 20%, and at its highest, it was close to 40%.
On October 9th, Hubei Broadcasting announced that the major shareholder, Hubei Radio and Television Station, and its concerted action person, Wuhan Cable Radio and Television Network Co., Ltd., plan to reduce their holdings of the company by no more than 3% through centralized bidding transactions and bulk transactions within three months after 15 trading days from the date of the announcement. This reduction plan was immediately questioned by investors on the same day: May I ask if the company's consecutive years of losses, no dividends for three consecutive years, and the major shareholder's share reduction and pledge actions comply with the regulations? And at the current stage of reduction, the price is far below the issue price, does it cause the loss of state-owned assets, and does it violate the State-owned Assets Supervision and Administration Commission's requirement for state-owned enterprises to do a good job in market value management?
Economist Ren Zeping made a call in response to the tide of shareholder reduction:
It is recommended to standardize the reduction of listed companies, and listed companies that do not pay dividends, break issuance, break net, and financial embellishment are strictly prohibited from reducing until the company's operations are good and value is created for shareholders. For listed companies with "clearance reduction" by shareholders, strictly review financial standards and operational health to avoid listing fraud and making money by cutting leeks. It is necessary to improve the quality of listed companies, turn the financing market into an investment market, and let investors have a profit effect in the long term, so that the prosperity of the stock market can be expected.
Ren Zeping's view has been recognized by many investors.
Who is reducing?
After analysis by the Economic Observer Network, it was found that the shareholders who have announced reduction plans since the "9·24" new policy have mainly been divided into four categories: the actual controllers of listed companies, controlling shareholders or major shareholders, the director, supervisor, and senior management team of listed companies, and strategic investors who hold more than 5% through various channels such as pre-IPO shares, agreement transfers, and auction proceeds.
On October 10th, the foreign shareholder of Aiyin Room, Partners Group Harmonious Baby Limited (hereinafter referred to as "United Investment"), chose to carry out the reduction plan within three months after 15 trading days from the date of the announcement of the reduction plan, with a reduction plan of no more than 3%. United Investment holds 10.91% of Aiyin Room's shares, which were obtained before the IPO.
On October 10th, the foreign shareholder of Dishengli, TYFUN INTERNATIONAL INC, also disclosed a reduction plan of no more than 1%.Many listed company shareholders planning to reduce their holdings include not only foreign investors but also private enterprises, state-owned enterprises, individuals, and corporate executives.
On October 10th, a research report from Huatai Strategy stated that the willingness of industrial capital to reduce holdings has picked up, but whether this will further translate into actual actions remains to be observed. The report's statistical data show that after the "9·24 market trend," the number of shareholder reduction plans quickly rebounded, with the net reduction plan size returning to 19 billion yuan.
The Huatai Strategy team observed that since September 30th, there has been a slight increase in major shareholders' reductions in the A-share market, and the willingness of industrial capital to enter the market, measured by the proportion of reduction plans to market value (market value proportion measurement: refers to the proportion of a certain stock's market value in the total market value), has declined. However, the intensity of reductions has not yet reached historical high levels. Since September 24th, industrial capital has cumulatively reduced net holdings by 6.6 billion yuan, which is relatively moderate compared to the scales of 7 billion yuan per week in March-April 2019, 20 billion yuan at the end of 2020, and 10 billion yuan from November 2022 to March 2023.
On May 24, 2024, the "Interim Measures for the Administration of Share Reductions by Shareholders of Listed Companies" came into effect, known as the "strictest reduction regulations in history." Major shareholders' reductions are subject to various restrictions, such as明确规定 that controlling shareholders and actual controllers are not allowed to reduce holdings through centralized bidding or block trades under circumstances like price breaks, dividend non-compliance, etc.; companies or shareholders under investigation by the China Securities Regulatory Commission or under criminal investigation by judicial authorities are not allowed to reduce holdings.
Currently, this reduction regulation is still in effect. This means that for shareholders of listed companies whose reductions are restricted, the difficulty of selling at high prices in the secondary market is greater compared to the previous bull markets.
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