Some institutions believe that the focus of bulk trading business lies in value exploration. The recent regulatory regulations on reducing holdings have a profound impact on bulk trading, with restrictions on the amount of bulk reduction and the addition of a "lock up period" for the transferee, making it difficult for the previous fast in and fast out and "short and fast" bulk trading business to continue. Investment institutions that rely on bulk trading are also facing a comprehensive reform of their business models.
Under the new regulations, institutions participating in bulk trading of listed companies need to return to value investing. "Value based bulk" requires investment institutions to focus on research on listed companies, market timing selection, and other aspects. The bulk trading will only be a business sector, and the investment team established behind it will be involved in diversified investment services around listed companies and major shareholders, "said an institutional head.
Service mindset and business model transformation
The new regulations on share reduction introduced this time clarify the requirements for the number and holding period of "bridge share reduction" through bulk trading for both the transferor and the transferee: for major shareholders or specific shareholders who reduce their holdings through bulk trading, the total number of shares reduced within any consecutive 90 days shall not exceed 2% of the total number of company shares. The transferee shall not transfer the acquired shares within 6 months after the transfer.
The new regulations on reducing holdings have caused mixed reactions from investment institutions involved in bulk trading. The investment institutions specializing in bulk trading mainly serve as a bridge for bulk reduction, including the need for major shareholders of listed companies to lock in the acceptance of reduction orders in advance, and the need to achieve tax reduction and avoidance through bulk trading. It can be said that bulk trading investment institutions play the role of intermediary brokers and turn this role into a business. Intermediary brokers naturally do not hoard goods in their hands for a long time, and their financial situation and risk control do not allow it. "The head of a bulk trading investment institution in Shanghai said that from this perspective, many bulk trading institutions will disappear after the new regulations are introduced. In fact, there are indeed many institutions that are" closing down and resting ".
Of course, there are also institutions that have calmly responded to the new regulations on reducing holdings. A Shanghai investment institution stated that the company is currently undergoing a business transformation through the reduction of holdings regulations. "Pure bulk trading has become increasingly difficult in recent years, especially with more and more institutions participating. The competition for pure bulk trading is growing, and the level of returns has also declined to a certain extent. With the timing of the new policy, the company is planning to innovate its business. Bulk trading business will continue to be more refined and value oriented, and will be regarded as one of the lines connecting listed companies and major shareholders with other needs." However, such transformation requires considerable investment, and for investment institutions, it is even more necessary to fundamentally transform their service thinking and business models.
New regulations promote the differentiation of investment institutions
Shen Wanhongyuan believes that after the new regulations on reducing holdings are introduced, there will be a certain emotional impact on the market in the short term. In the medium to long term, the new regulations on reducing holdings will bring more detailed and standardized constraints to listed companies, private placement institutions, and shareholder interests. The threshold for reducing holdings will increase and the pace will slow down, which is conducive to stabilizing investors' confidence in the secondary market and paying more attention to the quality and long-term growth of the company itself. The implementation of the new regulations has profound and practical significance for stabilizing market operation, encouraging long-term investment, improving the market mechanism for reasonable investment, and enhancing the focus of listed companies on shifting from virtual to real business. The secondary market will be driven by a more reasonable growth logic, enabling listed companies to achieve reasonable valuation levels. Truly sustainable and high-quality enterprises will stand out and gain the favor and trust of rational investors.
Similarly, investment institutions participating in bulk trading of listed companies will also differentiate under the promotion of new regulations. In the medium to long term, investment institutions will seek investment opportunities that combine short-term speculation and long-term value in bulk trading of listed companies. It is reported that some investment institutions have already organized teams to develop new models for bulk trading during the lock up period. In these new models, the original factors of "speculative" bulk trading are being replaced by new elements such as growth and value brought by bulk trading fundraising. Future bulk trading investments will be a competition of institutional value mining capabilities.