Home » The capital market reform in 2022 is now taking shape. The Central Economic Work Conference first mentions the full implementation of the registration system for stock issuance | registration system | stock issuance | science and technology board

The capital market reform in 2022 is now taking shape. The Central Economic Work Conference first mentions the full implementation of the registration system for stock issuance | registration system | stock issuance | science and technology board

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Original title: Capital market reform in 2022 is now coming

The much-anticipated Central Economic Work Conference was held in Beijing from December 8th to 10th.

Among them, in view of the key reforms of the capital market in 2022, Article 5 of the press release of the conference clearly stated that the “registration system for stock issuance shall be fully implemented.” This is the first time that the Central Economic Work Conference has proposed “full implementation of the registration system for stock issuance.”

In fact, the “full implementation of the registration system for stock issuance” was included in the top-level design for the first time in the “14th Five-Year Plan”. Previously, as the first year of the “14th Five-Year Plan”, the 2021 government work report only stated that the content of the registration system was “steadily advancing the reform of the registration system.” In the second year of the “14th Five-Year Plan”, the Central Economic Work Conference clearly stated that “the full implementation of the registration system for stock issuance” has also led many market participants to predict that the registration system reform is expected to speed up.

The conditions for fully implementing the registration system for stock issuance are gradually met

The discussion on the full implementation of the registration system for stock issuance has not stopped. The chairman of the China Securities Regulatory Commission, Yi Huiman, said at the 2020 Financial Street Forum annual meeting that he will continue to follow the respect for the registration system on the basis of summing up the pilot experience of the science and technology innovation board and the growth enterprise board. The three principles of basic connotation, drawing on international best practices, and reflecting the development stage of Chinese characteristics, steadily implement the registration system in the whole market.

“I personally think that through the pilot reforms of the Sci-tech Innovation Board and the Growth Enterprise Market in recent years and the improvement of the follow-up system, the conditions for the full implementation of the registration system for stock issuance are gradually being met.” Said this at the meeting.

At present, except for the Shanghai and Shenzhen main boards, all domestic stock markets have implemented the registration system for stock issuance; in June 2019, the science and technology innovation board was officially opened and the registration system was piloted. The company was listed; in August 2020, the first batch of companies under the GEM registration system were listed; in September 2021, the Beijing Stock Exchange announced the establishment, and the registration system was also implemented. Prior to this, the merger of Shenzhen’s main board and small and medium-sized boards also laid the foundation for the next step of the main board registration system reform.

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After the pilot registration system, both the Sci-tech Innovation Board and ChiNext market have attracted a large number of companies to go public. As of December 13, a total of 383 companies on the Science and Technology Innovation Board have completed registration, of which 367 have been listed. On the Growth Enterprise Market, 271 companies have completed registration after the registration system reform, and 82 companies have been listed on the nascent Beijing Stock Exchange.

“The advancement of the comprehensive registration system is an important sign of the maturity of my country’s securities market. The current sci-tech innovation board and the ChiNext registration system are operating smoothly, which provides valuable experience for comprehensively promoting the registration system reform. The current time to promote the comprehensive registration system has tended to Mature.” Chen Li, chief economist of Sichuan Finance Securities, also holds a similar view on the pace of advancement of the registration system.

Specifically, Chen Li pointed out that the current conditions for the implementation of the registration system in the entire market in my country have become mature. From the perspective of economic aggregates, my country’s GDP will grow by 2.3% in 2020, which is the only positive GDP growth rate in 2020. Major economies have a total economic volume of more than 100 trillion yuan. These basic conditions have laid a financial foundation for the comprehensive promotion of the registration system.

A group of market participants are more optimistic about the time for the implementation of the full registration system. Yang Minghui, general manager of CITIC Securities, said recently that it is expected that the full registration system is expected to be implemented in 2022, and the implementation of delisting will continue to increase. Major changes on the “entry side” and “export side” will further lead the market transformation.

Dong Qi, chief analyst of Guotai Junan Macro Research, also said that at present, the sci-tech innovation board and the ChiNext registration system are becoming more mature, and the Beijing Stock Exchange registration system has been implemented. The comprehensive registration system may be on the line. The possibility of landing in 2022 is relatively high. Equity financing Accelerate development, and the proportion of direct financing will increase.

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The reform trend of the registration system releases good news for brokers

The release of the “full implementation of the registration system for stock issuance” has also aroused feedback from the secondary market.

On December 13, the Shanghai Composite Index rose 1% in mid-day trading. Although the closing gains narrowed, it also returned to 3,700 points after a lapse of three months.

On that day, stocks of brokerage firms, known as the “bull market bearers”, also ushered in a general rise. Hualin Securities once rose by the daily limit, and closed at noon up 7.88%. Other brokerage stocks, such as Zheshang Securities, Oriental Fortune, and CICC, also achieved follow-up gains. However, as of the close of the day, the stocks of brokerage stocks retreated somewhat. 17 brokerage stocks in the market closed up, and Hualin Securities ranked first in the industry with a 7.04% increase. Zheshang Securities and Oriental Wealth closed up 4.53% and 3.33%, respectively, while the remaining stocks of securities firms did not rise more than 2%.

On the whole, analysts from Guotai Junan, Tianfeng Securities, Essence Securities, and Tianfeng Securities all expressed their expectations for the main board or the full implementation of the registration system in 2022, and they also recommend paying attention to the allocation opportunities of brokerage stocks in the relevant context.

According to statistics from Essence Securities, since 2019, 2020, and 2021, the IPO scale of the whole market is 253.2 billion yuan, 480.5 billion yuan, and 479.2 billion yuan, respectively, which has been significantly improved from before the implementation of the registration system. Among them, the registration system is implemented. The Growth Enterprise Market and the Growth Enterprise Market have contributed considerable increments. In the past three years, the total IPO size of the Science and Technology Innovation Market and the Growth Enterprise Market reached RMB 1,125, 31,19, and 292.6 billion, respectively, accounting for 44%, 65%, and 61% of the total market shares.

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For this reason, Essence Securities predicts that after the full implementation of the registration system, IPOs are expected to achieve normalized issuance, and the scale will be further expanded. On the one hand, it will promote the steady growth of brokerage investment banking business and bring brokerage direct investment and follow-up investment business opportunities. On the other hand, it will also drive capital. Expansion on the asset side of the market. “Benefiting from the implementation and promotion of the comprehensive registration system, it is expected that the income of investment banking business is expected to increase by 15% year-on-year next year.”

A relevant person in charge of an investment bank at a brokerage firm in Beijing stated that under the full registration system, investment banking business will be transformed from a traditional “channel business” to a “investment research pricing” business, and the information disclosure requirements will be strengthened for securities firms’ compliance requirements and intermediary responsibilities. Even higher, the importance of securities companies’ professional pricing capabilities and compliance risk control capabilities will increase.

Guotai Junan chief non-bank analyst Liu Xinqi also said that it is expected that the comprehensive registration system will further enhance the concentration of investment banking business, and top brokerages that can meet the comprehensive needs of corporate customers will benefit from the comprehensive registration system. The comprehensive registration system is conducive to improving the efficiency of issuance, increasing the proportion of direct financing, and bringing increased performance to the investment banking business of securities firms. The reform of the registration system puts forward higher requirements on the underwriting capabilities, pricing capabilities, and sales capabilities of securities firms. The top securities firms have rich talents and project experience, which can better meet the comprehensive needs of corporate customers.

In addition to the investment banking business, Tianfeng Securities also stated that with the continuous release of supply-side dividends, it is expected that residents’ asset allocation will accelerate the transfer to equity assets, and brokerages that have deepened the equity fund industry chain will further strengthen their advantages. Wealth management + asset management business promotes Increased profitability and robustness.

(Author: Man Le Editor: Zhang Yujie)


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