Since the stratification reform of the New Third Board market, investors have begun to pay more and more attention to this underappreciated market out of the expectation that they may obtain huge returns after the transfer to the board is successful.

Due to the high threshold for qualified investors, it is difficult for ordinary retail investors to participate directly, and large investors who have the strength to participate in the New OTC Market are relatively cautious in their investments.

After all, this immature market is still more risky than the A-share market.

Here, we will sort out the risks for you.

Liquidity risk is the most important risk in the New Third Board market. The trading volume of the entire market is only equivalent to that of an ordinary main board company, which is abnormal for the capital scale of the New Third Board.

When the trading system is imperfect and the board transfer system has not yet been introduced, the NEEQ stocks purchased can only be exited through an agreement to change hands, or they can be sold after the company's IPO.

However, the possibility of the basic layer and innovation layer other than the selected layer being transferred to the market is very small. If the market maker system is introduced, the liquidity will be improved to some extent, but there is still a big difference compared with the secondary market.

Expansion of Stock Selection Risks Before the expansion of the New Third Board, most of the listed companies were relatively good, and nearly half of them basically met the GEM listing conditions, so the investment risks were relatively small.

However, after expansion, the listing threshold has been lowered, and the quality of companies varies. It will be difficult for most companies to be listed in the future, and many of them may even go bankrupt at any time. For investors without the ability to distinguish, the risk is relatively high.

Moreover, the shares of some high-quality companies have usually been contracted by large securities firms or even held for a long time. As a result, many small institutions and individual investors are unable to obtain high-quality targets in the market, and choose sub-optimal companies to invest with lower returns and higher risks.

Valuation Risk The New Third Board has no requirements for the profitability of listed companies. Except for a few leading companies in sub-sectors, most entrepreneurial or conservative companies have poor operating standards and poor financing capabilities. Their stocks lack liquidity and there is no investment.

value.

Among the more than 2,000 companies, very few can be promoted to the selection level or transferred to the main board. Most companies are at risk of falling net worth when profits turn losses. Some stocks can fall to 10% of their original price or even be delisted.

In addition, financial statements can also be whitewashed. The profits announced are almost meaningless to ordinary investors. Most companies cannot pay long-term stable dividends, so how can they talk about valuation.

Trading Risks There are no price limits for New Third Board stocks. Judging from historical transaction data, the price fluctuations of some individual stocks are very violent.

Since the agreement transfer of the New Third Board often results in a huge price gap for the same stock, this weakens the price discovery function of the New Third Board, and the price of the agreement transfer cannot reflect the reality of the listed company.

In order to make profits, some private equity companies will even purchase large quantities of illiquid basic or innovative stocks at low prices, and then blow the market to trick uninformed retail investors into taking over.

The conditions for the listing of regulatory risk companies are still on a trial basis. Many unqualified companies have listed on the New Third Board through backdoor and other means. It is time-consuming and laborious for institutions to conduct due diligence, so they may give up investment.

Listing does not have a very good screening effect. The major shareholders of many companies regard the New OTC Market as a paradise for cashing out.

If the listing review system is combined with the hierarchical system in the future, and companies are rated at the same time as they are listed, supervision can be effectively strengthened and investors' risks can be reduced.