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www.LegiEX.com tells you how risky the equity pledge is

www.LegiEX.com tells you the risk of equity pledge. Not long ago, Zhengye Technology (300410) announced in a passive reduction announcement that Zhengye Industrial Investment Co., Ltd. (abbreviated as Zhengye Industrial) holding 43.77% of its shares Minmetals Securities' stock pledged repurchase business triggers a breach of contract clause. Minmetals Securities intends to adopt a centralized bidding transaction or block trading method to dispose of no more than 20.56% of Zhengye Technology's shares held by Zhengye Industry, depending on the actual situation.

The company's 20.56% of the shares are approximately 78.389 million shares, which is equivalent to that Zhengye Technology may usher in this up to 78.289 million shares in the secondary market. The impact cannot be underestimated. This sale is not only likely to cause investors to produce the company Doubt, it is also easy to lead to bearishness, the stock price is overwhelmed and fell sharply.

This year, there have been contemporary Oriental, Yanan Bikang, Kaile Technology, Derivative Technology, Shengli Precision, Tianxia Wisdom, Sanfu Outdoor, Xunyou Technology, Zhongying Internet, Cametech, La Chapel, Yihua Health have been released one after another Announcement on passive reduction of shareholders of the company.

The number of stocks pledged to explode or to close positions is even more "intermittent". In particular, in the context of the recent announcement that multiple listed companies have issued controlling shareholders or actual controllers to pledge shares facing the risk of liquidation, equity pledge is like a sword of Damocles, mixed with panic, hanging over A shares , Bringing hidden worries to investors and listed companies. What is equity pledge? Why is it so popular in the market?

There is an ancient industry called pawnshop in China, which was first produced in the Northern and Southern Dynasties. At the same time as the lender lends the cash, the borrower is required to provide a repayment guarantee and loan the funds according to the discounted value of the collateral. This is the prototype of the modern pledge.

The so-called equity pledge is a type of rights pledge. When the company's major shareholders are short of money, they can pledge their stocks to financial institutions such as banks, securities, trusts, etc. within a certain period of time to obtain loans to alleviate short-term liquidity shortages. The pressure brought by this is a financing method commonly used by large shareholders.

Equity pledges do not automatically transfer ownership of equity, so equity pledges can both raise money without diluting the equity of shareholders, so that the best of both worlds can be achieved.

Equity pledges have developed rapidly in recent years, especially with the aid of the Dongfeng leveraged bull market in 2015. Equity pledges in the whole market involved a market value of over one trillion in one fell swoop. Some listed companies have issued supplementary pledges or postponed repurchases. It is no exaggeration to say that the A-share market has gradually formed a "no stakes" situation.

The equity pledge is good, but the risks are also equivalent to the benefits. After the equity pledge, if the stock price falls below the closing line, the major shareholders ca n’t make up the position, have no money to repay the loan, and ca n’t stop the license. The ownership of the pledged stock will be Changes occur and financial institutions have the right to sell off, which will have a certain impact on the secondary market. When the stock price continues to fall close to the warning line, the financial institution will ask the major shareholder to fill the position; when the closing position is reached, and the large stock has no way to cover the position and repay the money, the financial institution has the right to place the pledged stock on the secondary market Sell off.

Those with a high proportion of pledges, once they encounter a large number of sell-offs, oversupply, the stock price will fall excessively, which will have a serious adverse impact on the national economy.

Because domestic listed companies, once the stock price has dropped abnormally and the market value has shrunk significantly, the cash flow cannot pay the debt, and it will inevitably be transmitted to the actual operation, and the operation situation will become worse.

In all industrial chains, once a listed company with an important position has problems with its operations, the upstream and downstream will inevitably be dragged down. Therefore, the normal decline in the stock market is acceptable, but if there is a cliff-shaped decline, it will trigger a crisis situation that is difficult for the real economy to manage.

In order to avoid this situation, all parties must participate in bailing out the market, otherwise what should those trillions of equity pledges do? Many large shareholders of listed companies participated in the equity pledge. Once the collective equity pledge problem broke out, it would crise the real economy and accelerate the economic downturn. Serious economic crisis will also occur, and no one can escape it. Therefore, all departments, units, and institutions must not sit idly by.

The high percentage of pledges held by the actual controllers of listed companies has been highly concerned by all parties since last year, and has become an important dimension for measuring risk. The parties involved in the market have also come up with a number of ways to focus on bailing out the pledged listed companies.

At present, the scale of government bailout special funds and securities dealers, funds, and insurance-related special products of local governments has exceeded hundreds of billions of yuan.

Regulators have continuously issued various encouraging policies, intended to solve the risk of pledged liquidity of listed company major shareholders ’stocks and stabilize domestic financial markets. Local governments, state-owned assets platforms, insurance institutions, and the first batch of more than a dozen brokerages have swiped their screens and set up their own The company's products help various listed companies.

From the perspective of bailouts and rescues, the premise of "saving people" is often to "see clearly" first. There are those who are not self-disciplined and aggressive and brave in the enterprises involved in equity pledges, but there are also some high-quality enterprises.

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