The Most Stringent Rules To Reduce ETF Change Or No Longer

The trend of shareholders of listed companies buying shares of ETF funds in stock market is becoming more and more serious.

Just after the National Day holiday, another shareholder of the listed company announced that he would take part in the ETF purchase.

In October 8th, the HKUST announced that 7 shareholders of the company were planning to purchase and purchase the CIS 300 Shanghai and Shenzhen 300 trading index open-end Index Investment Fund (hereinafter referred to as "Guo Lian An Hu Shen 300ETF").

The total number of shares planned for the 7 shareholders is 12 million 290 thousand shares. In October 8th, according to the closing price of the HKUST, the amount of these shareholders was about 380 million yuan.

Since this year, ETF announcements of shareholders of listed companies have changed frequently. Just before the festival, life insurance was converted into ETF fund shares by Vanke A and China Construction shares, which amounted to over 11 billion.

According to incomplete statistics of twenty-first Century economic report, nearly 50 listed companies have been transferred to ETF program by major shareholders during the year, and the corresponding amount of purchase is more than 20 billion yuan.

Although the listed companies mentioned the purpose of the exchange in the announcement, they generally indicated that they were to enrich their portfolios, optimize their asset allocation and business needs, but in the view of the market, the most important thing for ETF to buy is to reduce their reserves.

Before the "strictest" reduction rules are loosened, the trend of buying or selling ETF will continue.

Shareholders of nearly 50 companies buy ETF

From the beginning of the 37 mutual entertainment, ZTE, to the latest HKUST flight, more and more shareholders of listed companies try to buy their shares into ETF.

Reporters combed the announcement found that this year, about 50 major shareholders of listed companies have implemented the move to buy ETF, or announced the plan to buy ETF, of which a larger number of transactions involving billions of dollars.

Letter Shanghai and Shenzhen 300ETF total more than 4 billion 200 million yuan, accounting for more than 60% of the fund's first offer; in June of this year, 7 listed companies of the China Aviation Department bought and sold the rich country's central military leading ETF, and the total amount of purchase was more than 3 billion 800 million yuan, accounting for more than 50% of the fund's first raise. In September this year, the 1 billion 38 million Chinese construction shares held by people's life will be converted into 3 central enterprises, ETF, which is owned by Boshi, Jiashi and GF, and the total amount of purchase is about 6 billion yuan. In addition, all life insurance companies will also buy 196 million shares of Vanke A shares in September to become the fund shares of the development theme ETF of Guangdong Province, Hongkong and Macau, and the corresponding amount of purchase is over 5 billion yuan. Specifically, in May of this year, ZTE and China Petroleum major shareholders exchanged for ICBC.

From the time of implementation, the peak of the listed company's shareholders buying ETF is mainly concentrated in June, and more than 80% of the listed company's shareholder purchase cases occurred after June.

In addition, from the shareholders of listed companies who participate in the transfer, there are state-owned enterprises and private enterprises, among which there are many individual shareholders.

Why is it becoming increasingly popular for shareholders of listed companies to buy ETF? In fact, there have been many discussions in the industry. It is generally believed that the two important reasons for triggering the ETF exchange buying of listed companies are the low rate of ETF replacement and the reduction of no need for announcements.

On the one hand, for the shareholders of listed companies, borrowing ETF reduction has a certain cost advantage compared with the direct reduction of shares, because the ETF conversion rate is lower, and the stamp duty and dividend income tax can be avoided. On the other hand, the listed companies only need to disclose the ETF fund investment plan and the announcement of the results of the subscription, without disclosing the progress of the reduction.

A senior executive of a fund company in Southern China pointed out to reporters that the trend of shareholders' purchase of ETF by shares is a special practice in a special period, but a phased phenomenon.

The executives said, "for the shareholders of listed companies who are strictly restricted by the new rules, it is really convenient for them to buy ETF holdings. Therefore, in the second half of this year, there are many shareholders of listed companies who have large scale stock ETF. I think that shareholders of listed companies participate in the new ETF subscription in the form of replacement, and then sell them in the two tier market. The realization of capital withdrawal is a means of compliance, and the impact of direct reduction on the two tier market is relatively small. Moreover, the ETF of shareholders of listed companies is not all for the purpose of reduction, but some shareholders do have the demand of decentralized allocation.

The fund company has made a profit.

Even though there may be a reduction in the follow up, most fund companies still welcome the demand for shareholders of listed companies.

"Why do we not make money in front of us?" a general manager of a public offering fund bluntly said, "the development environment of public offerings is becoming more and more serious. Before the banks have financial products diverting money funds, there will be potential threats from bank financing subsidiaries, and some important policies may also be adjusted. It is obviously inappropriate to pick and choose customers' needs at this time."

Another public offering also held similar views. "The ETF of shareholders of listed companies will help increase the size of the fund at the present stage. Of course, we do not exclude different fund companies from different considerations, but basically, big fund companies will not reject such demand. "

However, there is a certain shrinkage in the proportion of ETF share in the high proportion of listed companies.

Take the ICBC Credit Suisse Shanghai and Shenzhen 300ETF as an example, in August 16, 2019, the share of the fund's listing was 1 billion 800 million, with a net value of 3.6319 yuan and a total scale of 6 billion 540 million yuan. But as of October 9th, its latest share was only 1 billion 58 million, the latest scale was 4 billion 76 million yuan, and the scale was reduced by nearly 40%.

In addition, the ETF8 of the rich countries in the 26 months of the first 7 billion 202 million months of the listing was reduced to 5 billion 848 million in October 9th, and the share was reduced by nearly 20%.

In response, a person interviewed by the public offering market department said, "some shareholders of listed companies have reduced the share of the relevant products after the purchase of ETF, but they are not completely left behind. For example, a ETF sends out eight billion or even tens of billions of dollars. After half a year, it leaves $4 billion, which is acceptable to fund companies.

A noteworthy situation is that the most stringent new rules in the near future are being discussed more and more in the industry. Some people in the industry expect that there is a possibility of loosening the strictest restrictions on new rules.

"If the restriction is relaxed, then the shareholder rate of the listed company will not be so positive that it can be reduced through the purchase of ETF," a Guangzhou ETF fund manager pointed out. "The direction of ETF investment is not clear, which is of little significance to the market. Moreover, due to information asymmetry, this is in line with the "old car market" model in economics. Good stock is not willing to change, and bad stocks are highly motivated.