Category: Money Tips Date: 2007-05-03
Source: International Finance News Author: Gui Haoming
While for most investors, the Bank of China has just finished issuing H shares changed hands after the issuance of A shares is difficult to imagine one thing, but by virtue of a "green channel", it still did so.
The latest news is that the Bank of China started road shows days, months, released early next month listed. Some people describe the Bank of China is a "lightning speed" take the issue from the submission of the application to the final journey to achieve the listing, which though a bit exaggerated, but it does also reflect the process of the Bank of China IPO to be far more than other varieties.
The question now is, Bank of China Surprisingly quick release on the market will produce what kind of impact? In the June 7, with the Bank of China will release the news of the day the stock market dropped sharply. Although it is difficult to say the stock market crash is because the Chinese banks to issue new shares, but it does exist between the two relations.
After all, a fund-raising amount of up to 200 billion behemoths landing A shares, like an aircraft carrier into Hong Kong and says that he stirred up a bunch of water droplets caused by a burst surge, it is unrealistic. In the past more than a year of time, only the secondary market investors do not involve the primary market. In this context, capital flows are single. The new shares issued after the restoration of the original situation with only one market into two markets, so capital is bound to start streaming.
For institutional investors, this is an important time for the adjustment of asset allocation. And such adjustments will inevitably lead to a reduction in the secondary market for the money. Especially where there is a relatively high success rate in the large cap IPO cases, this adjustment is likely to more violent forms to complete. June 7 market conditions, it's very clear reflection of this.
Historically, such cases are routine, whether it is issued in previous years
China Petrochemical, or issued by China Unicom, Baosteel, the markets are in order to decrease response. From this perspective, and now the Bank of China issued so that people feel the pressure of expansion, leading to the broader market adjustment, it is only natural thing.
However, the words have to speak back, the Bank of China is a big issue although the expansion pressure, but the pressure is unbearable. In the past, the market size is much smaller than it is now, the daily turnover is also far less the case of the current level, the stock market in a year also have suffered more than 100 billion yuan of the expansion pressure, G long-time power distribution market is very depressed , but more than 100 billion the amount of funding has also been relatively calm in the atmosphere resolved. This means that, with the present in terms of market potential, 200 billion Bank of China A share issue is not can not bear. The problem is that this issue will result in the secondary market, excessive diversion of funds, resulting in seriously affect the market remains stable.
In fact, this is what investors are most worried about. Apparently, according to the above analysis, diversion of funds is certainly there, but not necessarily be very large.
It may be projected this: Amount due to Bank of China Internet is probably only about half of the total issue amount, approximately 100 billion, while the preliminary estimate of stock subscription funds will be 600 billion yuan, with an average success rate may be 1.67%, if the stock price to market be able to rise 30% (which would make the Bank of China A-shares should be higher than the current valuation of the other banks in the Shanghai-listed shares), then the return rate is 0.501 percent, however. And people see that, on the June 12 Shanghai Pudong Development Bank rose 3.66%, China Merchants Bank rose 3.24%, up 1.78% Minsheng Bank, Huaxia Bank rose 0.96%.
It is not difficult to see, purchase of new shares of the income is not much, for good at capturing market opportunities for investors, it is clear in the secondary market, profit margins should be larger.
This reason, we should say is very easy to understand, therefore, face a market capitalization of the stock issued primarily to withstand the pressure brought about by the financing, apart from issuing new shares and listing on the market impact of actually not be significant. On June 12, at the Bank of China issued the timetable has been scheduled with the listing, and two days after the issuance of new shares against the backdrop of both Shanghai and Shenzhen stock markets repeated several times, eventually to rise at close. As a result, despite the pressure of expansion can be seen, but it does not say is particularly large and can not afford.
Now, ignoring the pressure of new shares issued is obviously wrong, one must admit that the current expansion has entered a period do a good job must be based on the actual allocation of funds. At the same time, too worried about capacity expansion is also wrong. Bank of China issued the case, has given us very clear advice. Here, the most important thing is to run a good grasp of the broad market trend, sights direction. Otherwise, it is not a failure to avoid the pressure caused by expansion out of adjustment, that is, missed the bull market of the stock market should be.
