Dong Dengxin: Four Major Challenges For Gem

The gem has been established for five years. Over the past five years, the growth enterprise market has made great progress, but there are still four major problems to be solved.

First, the scale of gem is still very small, and it is difficult to meet the market demand. The market needs to be "bulky", and without scale, there will be no scale effect. After five years of expansion and development, as of October 10, 2014, only 397 listed companies were listed on GEM, with a total market value of only 2 trillion and 260 billion yuan and a circulation market value of only 1 trillion and 370 billion yuan. The total market size of the growth enterprise market is only the same as the market value of China Petroleum A shares (excluding H shares), which is a typical "pocket board".

The scale of the growth enterprise market is too narrow. The superficial reason is that the expansion is too slow, but there are two deeper reasons: first, the administrative intervention and low efficiency of the approval system; two, the threshold of the industrial version of IPO is too high. Because the market size is too narrow, on the one hand, it can not meet the needs of many innovative SMEs, and to a large extent dampen the enthusiasm of VC (venture capital) and PE (private equity). On the other hand, it can not meet the huge investment demand of investors "stir up small" and "stir up new", which is likely to cause excessive speculation on GEM.

Second, the threshold of gem IPO is too high, and the market lacks adequate inclusiveness. At present, the IPO standard of Shenzhen Stock Exchange's gem is basically designed according to the "industrial standard" of the motherboard. With the approval system's queuing scoring, good selection and excellent selection, it not only increases the time cost of applying for IPO by enterprise queue managers, but also artificially pushes up the IPO threshold of gem, which makes it difficult for many innovative, high growth and new format companies to meet the listing standards, especially the Internet Co, which is temporarily in light assets and less profitable, is not eligible for IPO.

Obviously, too high IPO threshold is incompatible with the spirit of the gem. Gem is both a high growth board and a high risk board. It is tolerant of failure and tolerant of bankruptcy. Because the main body of gem IPO corresponds to high risk innovative enterprises. They also belong to the small and medium sized enterprises with high mortality. Therefore, the reality of the gem must be "big come and go out" and "wave breaking sand". To this end, the IPO standard should be more inclusive. Only with this spirit of inclusiveness can we show the true qualities and spirit of the fittest. Only such gem can cultivate a large number of future great national companies.

Third, the gem valuation is seriously high and the bubble components are large. Based on the closing statistics in October 10, 2014 (data from various stock exchange websites), the Shenzhen Stock Exchange, which just came out of the bear market, has an average price earnings ratio of 69.25 times. At the same time, the Shenzhen Stock Exchange's A share (including GEM) has an average price earnings ratio of 32.40 times, while the Shanghai Stock Exchange's A shares have an average price earnings ratio of only 11.55 times. Obviously, the high price earnings ratio of the gem has greatly pushed up the A average price earnings ratio of Shenzhen Stock Exchange. Before the establishment of the gem, the Shenzhen Stock Exchange and Shanghai Stock Exchange's average price earnings ratio was basically the same, and today's Shenzhen Stock Exchange, which contains the gem, has an average price earnings ratio of 200% higher than that of the Shanghai Stock Exchange.

In addition, we compare it with two overseas gem. According to the closing statistics of the same trading day, the average price earnings ratio of Hongkong gem in the bull market is only 11.32 times, and the average price earnings ratio of NASDAQ, which is also at the peak of the bull market, is only 24.2 times. By comparison, Shenzhen Stock Exchange The average price earnings ratio of gem is 500% and 400% higher than that of Hong Kong stocks and US shares respectively.

According to the past bull market experience, when the average A of the Shanghai Stock Exchange has risen from 11.55 times to 30 times, will the average price earnings ratio of the Shenzhen Stock Exchange Board rise from 69.25 times to 200 times? Obviously, the gem valuation is seriously high and the bubble is bigger. The fundamental reason is that the gem is seriously short of supply, so it can not meet the huge demand of investors and shareholders.

Fourth, the implementation of registration system is uncertain. When will the 1 yuan delisting rule be launched? To solve the above problems, the only way is to solve the above problems. System reform The abolition of the approval system and the implementation of registration system. Because registration system naturally adapted to the gem's "market decision" and "investors voting with feet". The essence of registration system is the "de administration" of the primary market, which reduces government administrative intervention, eliminates the government's decision on investors or judges instead of investors, respects market decisions and investors' choice, and ultimately forms the market law of "sellers have responsibilities and buyers buy themselves".

However, Registration system The successful implementation of this system also requires strong institutional safeguards. First, we should improve the efficiency of supervision, strengthen supervision afterwards, and severely crack down on securities crimes. Two, investors must learn to vote with feet, so that 1 yuan shares become the pronoun of junk shares, and let the 1 yuan delisting rule become the most important and popular delisting standard. This is not only because the delisting rule of 1 yuan is the most delisting standard of marketization, but the 1 yuan delisting law also allows the system premise of "loss listing".