My fintech empire.

Chapter 1424 [The "big brothers" who were trapped are anxious to get out of the trap]

Fang Hong listened to this supplementary provision and nodded in agreement, saying, "This is fine. It fills a loophole. Everyone agrees, and I also agree to add this provision."

He also expressed his approval, so basically there is no doubt that this supplementary item will be added.

Once the new regulations are officially implemented, issuers that wish to register for listing will have to give the market a valuation quote that they deem reasonable for their company.

Some people may think that if the issuer is allowed to make its own valuation and quotation, the quotation must be high. However, the problem is that once the issuer is found to have committed fraud or violated regulations and the company is forced to delist, it must repurchase the shares from public investors according to the valuation given by the issuer.

Under this regulation, if an issuer wants to report a too high valuation for his company, he dare not do so blindly because he knows the situation of his own company best. Once he gives himself an unreasonably high valuation, he will inevitably be liquidated and lose everything.

Tian Jiayi thought for a moment and said, "But let's add to this regulation. If the issuer gives a very low valuation to its own company, will the market still be willing to give the company a high valuation?"

Hearing this, Fang Hong smiled and said, "Don't go to extremes. Political economics is not perfect, and market economics is not completely useless. It still has the ability to discover prices."

Fang Hong added: "If the company itself is really excellent, the issuer's valuation is low, and the market can find the price, so the valuation will go up; vice versa, if the company itself is not good, the issuer's valuation will also fall even if it is high. The good thing about this regulation is that it cultivates the rational understanding of valuation among corporate issuers and investors, and promotes the healthy development of the capital market."

The fundamental issue is fairness, fairness, and damn fairness.

Under such an operating mechanism, if the enterprise itself is not a good thing, the issuer dare not overvalue it, because then it will lose everything; if the enterprise itself is very good, the issuer cannot underestimate it too much, because if the valuation is too low, when raising the same amount of funds, the issuer will either give more equity or take less money. The issuer will definitely not be happy with a transaction that is obviously at a loss.

In short, as the rule maker of this field, we should set the rules and eliminate the loopholes. The rest is for the market to play itself out, discover the price and reflect it in the asset price.

……

The next day, Monday, March 2st.

The first trading day of the Lunar New Year arrived as scheduled, and today the three major A-share indices rose collectively.

Among them, the almost forgotten ChiNext Index soared as much as +8.52% today, returning to the 1000-point mark. Multiple sectors rose successively during the session, theme stocks performed quite actively, and hundreds of stocks hit the daily limit.

The ChiNext Index has therefore become a hot topic among investors of the A-share market.

In Fang Hong's previous life, the lowest point of the ChiNext Index was 2018 points at the end of 1184, but this index has fallen below 800 points before the New Year, which is quite tragic. The daily trading volume of the entire ChiNext Index is maintained at around 200 billion, and sometimes it is even less than 200 billion. It is almost no longer in a state of play.

The reason why the stock price surged by more than 8 points today was because of the rumor yesterday that the two neighboring cities would also introduce new delisting rules.

Then a large number of investors were also confused, saying that they could not understand the logic of the two neighboring markets. Logically, the wildly circulated news should be bad news for small and medium-sized start-ups and good news for large blue chips with good performance. Although large blue chips were also rising, the surge in small and medium-sized start-ups was obviously more severe and crazy.

The ChiNext Index and the SME Board Index both soared by 8 points.

This is all driven by the news that is currently going viral. It is rumored that the new delisting rules will require delisting compensation and repurchases based on fair value assessments by third-party institutions.

In the three years since the SGX was listed, especially since 2018, small and medium-sized enterprises have suffered so badly that the ChiNext Index even fell below the initial value of 1000 points at one point. It can be seen how tragic the situation was.

If the delisted stocks are repurchased according to the fair value assessment conducted by a third-party agency, many stocks on the ChiNext board are now seriously oversold.

For example, there is a GEM stock whose current market value is 16 billion yuan, but if the company is delisted, it is actually worth 30 billion yuan based on fair value. If you buy the stock at the current market price, you can steadily earn more than 80 points of profit, which is simply giving money away.

So similar companies were bought up by funds today, and many stocks that were severely oversold hit their daily limit.

But there is a very critical question, that is, are the performance of the small and medium-sized start-up stocks next door fake? Are the performance inflated? Are the performance whitewashed?
For example, the current market value of a GEM stock of 16 billion yuan can be valued at 30 billion yuan according to fair value assessment, which is based on the premise that the company's performance report is not inflated. If the performance is inflated and the report is embellished, the company has actually been hollowed out long ago, and the final fair value obtained by the assessment is only 1000 million yuan.

If you had ambushed in when the market value was 16 billion, you would have suffered a direct loss of -99.37%. If you had bought in 100 million, you would have only 6300 yuan left.

But the reality is that the vast majority of small and medium-sized retail investors do not have the ability to distinguish performance, nor do they know whether the performance is a true reflection. They just think that there is an opportunity to make money from the small and medium-sized start-ups next door, and they can pick up money by bending down.

So many people rushed to grab it. Even if some people thought there were pitfalls and risks, they thought that after the decline, how much lower could it go? And they thought they might not be the last one to take over.

In fact, this rumor is not a coincidence.

Instead, some "big brothers" are really trapped badly. There is no liquidity and they can't get out even if they want to cut their losses. The small and medium-sized start-ups next door are almost becoming H shares. Penny stocks are beginning to appear, and you can dig your way out of a hole with just a few hundred thousand dollars.

This really made some of the "big brothers" who were trapped very anxious. They had to find a way to get out of the trap as soon as possible. After much thought, they saw the rumors about the new delisting rules from the Singapore Exchange market, which gave these "big brothers" an idea. Seeing that the investors were so excited and supportive of this matter, they came up with an idea.

This is how the rumor came about, creating an opportunity to make money and attracting funds to rush in. Moreover, the timing has now reached the time for the annual report to be disclosed, and with the addition of a wave of annual report hype, a fortune can be made and the market is quickly untied.

Those financial rentiers also know that if they delay any longer, they will have no chance to get out of the predicament.

They also knew that even if Fang Hong saw through them, he would not come to mess with them, because the two sides had reached a tacit consensus since that confrontation in the middle lane: you play yours and don't mess with me, and I play mine and won't mess with you.

The higher-ups also warned Fang Hong not to interfere with the people next door, and that the focus was to get the SGX market in order. And since then, Fang Hong would not take the initiative to provoke them as long as those people didn't come to provoke him, and there was indeed no apparent conflict.

But Fang Hong also quietly set up networks and dug traps overseas, waiting for these people to make money before cutting them off.

Judging from today's market conditions, quite a few retail investors have indeed jumped in. Retail investors are eyeing their profits, but they are eyeing the retail investors' principal.

Retail investors who follow up now will most likely make money, but once the hype starts, there will always be someone to take over the last baton and pay for those in front.

Fang Hong also chose to watch from the sidelines. There was nothing much to say about the retail investors who were cut off. They were not satisfied with being able to participate in ETFs in the SGX market, and they did not deserve sympathy if they stepped on a landmine.

As the market closed, the three major A-share trading markets all rose sharply on the first trading day after the holiday.

The SSE 50 Index hit a new historical high and reached the 4700-point mark in one fell swoop, closing up +1.70% at 4705.55 points after the market. The Shanghai Composite Index closed up +1.36% at 2653.90 points, and the Shenzhen Component Index soared +3.06% to 7919.05 points.

The total trading volume of the three major markets increased to 11862 billion, of which the SGX market had a full-day trading volume of 8663 billion, an increase from the previous trading day.

……