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Briefly on listed companies repurchase holdings and the extension of holdings Economic Significance

Author: ZhaoMingZuo From: www.yourpaper.net Posted: 2009-10-21 08:48:47 Read:
Summary: After a certain period of decline, the affirmation of First Industrial capital investment value of China's A-share market, the repurchase of listed companies, holdings, and the extension of holdings into multiple stages, those for China's capital market, no doubt convey a lot of new information. Explore behind the positive significance of these events, there is an important role in enhancing the confidence in the capital market investors.
Keywords: listed company holdings of value investing

The China Securities Regulatory Commission issued in August 2008 acquisition of listed companies management approach "to modify the decision, free holdings of an application for exemption from the" pre-application "to" ex post facto "encourage listed companies to the shareholders of the Company's stock. Soon after the promulgation, there are six companies has released overweight announcement, the A-share market in the second half of 2008, holdings of the leader of the movement. September 18, the State Council, the SASAC publicly support the central corporate holdings or repurchase shares of listed companies. Subsequently, the China Petroleum Group holdings of the first 60 million shares of the listed companies to spend more than 700 million yuan of funds. Shortly thereafter, Huijin, China Coal Energy, Sinosteel Tianyuan, Sinochem International subsequently set off a wave of "in" prefix holdings of central enterprises tide. Local state-owned enterprises and non-state-owned capital is also actively follow up, from central to local holdings from state-owned enterprises to private enterprises in the three-dimensional pattern.

Listed companies to repurchase, holdings and extension of the reduction of motivation

(A) strategic financial investment
Listed companies to repurchase, holdings and extension of to underweight most direct purpose of financial investment. The basis of many of the sharp rise in the stock in 2007 ostensibly to enhance the performance, In fact, most of this performance and the growth of their core business without a significant relationship. Look at the mode of growth for the company in 2007, cross-shareholdings is the most eye-catching, but also respected the results of one of the growth mode of the stock market. Cross-holdings in real terms is a financial investment. Crossover phase of the bull market can quickly improve the company's financial position, improve the company's performance. After crash, A Unit of value investing has emerged is the industrial capital into the market the best stage of bargain-hunting. Therefore, those strong capital enterprises will choose the valuable investment company holdings, the implementation of a strategic investment.
(B) of industry restructuring and mergers and acquisitions needs
Industry mergers and acquisitions is an ongoing process, and this process, one of the important factors of the replacement cost is the primary consideration. Current economic cycle is in the stage of final stock market run in the bottom of earnings and book value are lower, which are possible for mergers and acquisitions among listed companies. Listed company holdings and evolved into mergers and acquisitions will become the norm in the market. Potential for development in the next economic boom cycle, in line with the direction of the national industrial policy, and again in the current valuation of the low-lying stage companies will most likely occur holdings and acquisitions. Of course, some enterprises in order to get through the two poles of the industrial chain, or enhance the company's ability to control a significant impact on their industry, and even out to occupy a larger market to consider the elimination of competitors as well as prepare for future mergers and reorganizations, the become holdings of mergers and acquisitions of object. Analyzed from different perspectives repurchase of listed companies, the overweight and the extension of holdings significance

(A) from the standpoint of supply and demand to change the structure of supply and demand in the secondary market
Listed companies in the secondary market, prices are ultimately determined by the stock between the number of changes. When the purchaser's desire to buy a variety of reasons inspire, expressed as the relative increase in demand on the market, the price will rise quickly. On the contrary, the price will decline rapidly. Currently, the severe economic downturn, the expected decrease in revenue was severely enlarged capital market investors dumped out of considerations of risk aversion, stock, plus the size of the non-concentrated holdings, supply is relatively higher than the demand. Therefore, secondary market prices plummeted become an unavoidable reality. Occurred in August 2008 after market repurchase of investment entities, the overweight and the extension of holdings is no doubt how much change the supply and demand structure, reducing the supply pressure. Active role in the stability of the capital market, ironing oscillation amplitude.
(B) information asymmetry speaking, release the value of the investment signal
The capital market is asymmetric information spaces. Although a lot of access to information, but the cost of the value of information sources is still more expensive, and the noise factor, the screening of the authenticity of the information appears difficult than before. In this case, the company repurchase, overweight or extension holdings so open to retail investors is not easy to get the value of information. For whatever purpose, the release of the value of the holdings are overweight judgment, including the direction of development and potential. It can be said that equity repurchase, holdings, and the extension of holdings in fact, the direction of the information advantages and disadvantages of the interests of the transferee.
(C) from a behavioral finance perspective, boosting investor confidence in the capital markets
The capital market is a mixed trading of complex psychological process, the status of the trading behavior of investors led psychological factors, such as: lack of confidence, self-confidence and excessive lead to capital markets appear irrational run. A-share market fell toward the loss of confidence is a key. Therefore, a large number of holdings, repurchase, and the extension of holdings to correct the distorted expectations of investors, investors see hope.
(D) value judgments speaking, in line with the social value orientation
An excellent company and managers in addition to advocating value investing, corporate public image recognition is to consider priorities. It is generally filled with panic when the uncertainty on the capital markets of tomorrow, repurchase holdings, and the extension of holdings, is undoubtedly good to the community interpretation of corporate social responsibility and value orientation. In fact, the values ??of an enterprise only and social mainstream values ??match it to the times, to get fast and long-term development.

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