Securities lending business refers to institutions that hold stocks (including fund companies, major shareholders of listed companies, investment companies, etc.), which can lend stocks to speculators for sale through securities companies.
However, the securities lending business is limited to securities dealers, and the scale of securities lending is limited.
After the launch of the securities refinancing business, the scale of the securities lending business was expanded, allowing securities companies to lend securities to institutional investors such as funds and social security funds through the platform of securities finance companies, and then provide the securities to margin financing and securities lending customers for short selling.
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The refinancing of securities has expanded the source of securities subject to margin financing and securities lending, and the opportunities for short selling in securities lending have increased.
On February 28, 2013, the pilot program of refinancing securities was officially launched, and the first batch of underlying securities lacked motivation for short selling.
Significance First of all, the pilot refinancing business will accelerate the differentiation of investor structure, and the power of institutional investors in the market will become increasingly powerful.
The birth of stock index futures gave institutional investors a short-selling tool, and the living environment of small and medium-sized investors in the A-share market changed.
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With the securities refinancing business, institutional investors can not only make money by shorting the underlying securities of the securities refinancing, but also short stock index futures while shorting individual stocks, avoiding market risks through diversified trading strategies and earning excess returns.
The combination of refinancing and stock index futures and the increase in short-selling weapons have brought double profit opportunities to institutional investors, but it has completely overturned the A-share profit model that small and medium-sized investors are accustomed to and rely on to make profits from rising stock prices.
Retail investors will be gradually marginalized in the era of short selling, while institutional investors who have both sides will become the mainstay of stock market investment. The A-share market is expected to gradually transform from the era of retail investors to the era of institutions.
Secondly, the pilot refinancing business will accelerate the change of investors’ investment philosophy.
Strong speculation is the biggest characteristic of investors in the A-share market. This characteristic has even earned the A-share market the reputation of a "casino."
The prevalence of speculation is certainly due to the immaturity of investors and the market itself, but it is also closely related to the lack of a short-selling mechanism for individual stocks.
Without a short-selling mechanism for individual stocks, stocks that whitewash their reports and manipulate their performance can still continue to reward speculative investors through the wealth effect when their stock prices rise, thereby strengthening the speculative concept.
After the refinancing business is launched, there will be more and more companies like Muddy Waters that make a living by investigating and digging out problems in listed companies. Overvalued stocks will attract short sellers, and the valuation of listed companies is expected to become more reasonable.
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Once the profit-making effect of refinancing appears, short selling will be very popular. The short selling mentality will subvert the deep-rooted bullish thinking in the A-share market, thus forcing investors to change their investment philosophy.
Although this process will not happen overnight, the development trend is irreversible.
Thirdly, the pilot business of refinancing securities will also bring about the return of the value of the securities underlying refinancing securities, which will trigger an adjustment in the stock price structure in the long run.
How big is the A-share stock price bubble?
According to what an expert said not long ago, "even if the A-share market drops to more than 1,000 points, more than 70% of the stocks will still have no investment value," which shows that there is a long way to go to adjust the A-share stock price structure.
However, without a short-selling mechanism for individual stocks, even if the stock price is overvalued, it is difficult to squeeze out the bubble.
After the pilot of the securities refinancing business, there is no need to worry about chips when shorting individual stocks, and the long and short forces on the underlying securities will fundamentally change.
Although the underlying securities that entered the pilot program in the initial stage only covered 90 large-market blue chip stocks in Shanghai and Shenzhen (50 in the Shanghai stock market and 40 in the Shenzhen stock market), the securities companies participating in the pilot refinancing business, the number of underlying securities, and the number of securities available for lending were all
The era of limited, large-scale and comprehensive short-selling of individual stocks has not yet come.
But the establishment of the short-selling mechanism for individual stocks has taken a far-reaching step after all.
It is believed that after accumulating experience and achieving successful pilot projects, the number of stocks subject to refinancing and securities lending objects will expand, and the market will become increasingly active; and the expansion of the securities subject to refinancing and securities lending objects will inevitably greatly facilitate investors
Shorting individual stocks, thereby accelerating the adjustment of the A-share stock price structure while the short-selling mechanism is constantly improving.
Among them, the long and short forces of institutions are relatively balanced, with reasonable valuations and stable performance. Large-cap blue chip stocks that have experienced the baptism of margin financing and securities lending in recent years will have solid performance and are very unlikely to be shorted by securities lending. This is also a pilot
The reason for choosing blue chip stocks as the underlying securities for securities refinancing in the early stage; however, once some high-valued small-cap stocks on the GEM and small and medium-sized boards can be refinanced, their stock prices will face greater adjustment pressure. Although they have not become securities refinancing,
In front of the underlying securities, the funds diverted from the market will still speculate on these stocks.
Interpretation: The pilot launch of the securities refinancing business will objectively increase the source of securities for securities lending transactions, and the market is worried that it will amplify the scale of securities lending and short selling.
In this regard, relevant experts said that securities refinancing is only a supporting system for improving the market transaction mechanism and is still in its infancy. Overall, its role is neutral.
Experts believe that the launch of the pilot refinancing and securities lending business this time is another important measure to improve my country's margin trading system. Its main purpose is to improve the mechanism, which will further improve the resource allocation capabilities and market efficiency of the securities market and satisfy the diverse needs of investors. It is of great significance to meet the needs of diversified investment and risk management, strengthen the concepts of long-term investment and value investment in the securities market, and improve the income, innovation capabilities and risk management capabilities of securities companies.
According to calculations by relevant experts, based on 90 underlying stocks, under a neutral market situation, the trading volume of securities refinancing was 124 million shares, and the transaction volume was approximately 1.19 billion yuan. The average daily new securities lending and selling transaction volume accounted for 1.19 billion yuan.
The average securities lending transaction volume is about 7%.