Rich Dad’s Financial IQ Cultivation: Stock Fundamentals

Chapter 13 Issuance and Listing of Stocks (3)
(2) Monetary policy.Monetary policy, also known as financial policy, refers to the government's regulation of the macroeconomy through the central bank's management of money supply to regulate credit and interest rates in order to achieve certain macroeconomic goals.According to the direction of operation, monetary policy can be divided into: tight monetary policy and loose monetary policy.Tight monetary policy refers to reducing money supply, raising interest rates, and strengthening credit control; loose monetary policy refers to increasing money supply, lowering interest rates, and loosening credit control.In terms of operation methods, the "counter-cyclical" method is generally adopted, and expansionary monetary policy is adopted when the economy is in recession, and contractionary policy is adopted when the economy is overheated.In general, loose monetary policy makes security prices rise, and tight monetary policy makes security prices fall.The specific performance is:

(1) The loose monetary policy provides sufficient funds for the production and development of enterprises, and the profits rise, thus the stock price rises.

(2) The loose monetary policy increases the total social demand and stimulates the development of production; at the same time, the income of residents is improved, thus increasing the demand for securities investment.

(3) The interest rate of the bank decreases with the increase of the money supply, and some funds are transferred from the bank to the securities market, which expands the demand for the securities market; at the same time, the decline in the interest rate also increases the attractiveness of the securities, both of which make the stock price rise; vice versa Of course.

(3) Personal income policy.Income policy is the principle and guideline formulated by the state in order to achieve the overall goal and task distribution of macro-control.The impact of income policy on the stock market can be divided into short-term and long-term.In the short term, the impact on the securities market is mainly through the transmission of fiscal and monetary policies; in the long term, changes in the income distribution pattern have an impact on the securities market.With the establishment and improvement of my country's socialist market economic system, fundamental changes have taken place in the income distribution pattern.Farmers' incomes increased, urban and rural residents' incomes increased, and enterprises retained more profits, which led to a substantial increase in private financial assets and reached a considerable scale.Since social accumulated funds are inclined to the public and dispersed to the society, it is necessary to use the securities market to realize the best use of funds.Therefore, my country's new distribution pattern has formed a realistic and potential driving force for the development of the securities market.With the improvement of the economic situation, the improvement of the economic system, the regulation of the securities market and the proper resolution of related issues, its potential influence will finally be realized.

(4) National debt policy.As the main means to make up for the fiscal deficit, treasury bonds are also one of the investment tools in the securities market. Their issuance, maturity, interest rate, and liquidity all directly affect the stock market.From the perspective of supply and demand, the issuance of treasury bonds increases the supply of securities, reduces the amount of money in the market, and has a negative impact on stock prices; from the perspective of interest rates, the higher the interest rate, the more attractive it is to investors, thereby reducing investment in the stock market. funds, causing the stock price to fall.

[-]. National policy on the stock market
China's stock market is an emerging market, and irrational investment behaviors often occur, and the rules of the game must also be improved.The state has adopted a variety of control methods on the stock market to avoid the sharp ups and downs of the stock market.Under such circumstances, the Chinese stock market has a more prominent feature of "only policy follows the lead", and its operating trajectory is often distorted or revised, so there are often "policy bottoms" and "policy tops" (these statements have their reasons, but "policy "Bottom" and "Policy Top" have different measurement standards in different periods and backgrounds).As an external force, policy relies on the backing of the country, and its effectiveness cannot be countered by the internal tension of the stock market.

We have seen that when the stock market is rising, investors are more enthusiastic, and those chasing the rise are like "crucian crucian carp crossing the river", which leads to overbought and overbought scenes; The atmosphere of panic is pervasive, stocks are like hot potatoes, technical indicators are oversold and passivated, and technical people are surprised.It can be said that technical analysis at this time is just a display and self-anesthesia, and has little practical significance. It is difficult to change the situation only by internal forces in the stock market, and only external forces can be relied on.For example, the "1999" market in 5.18 was approved and supported by the national policy, and was characterized as a "restorative" market, thus confirming a bull market.

The country has never wanted the stock market to slump. In 1994, the Shanghai and Shenzhen stock markets hit new lows repeatedly, and the market was filled with pessimism and despair.At that time, experts debated the reasonable investment point of China's stock market. One of the typical views was that the earnings ratio of China's stock market should be in line with that of mature international stock markets.And taking the Shanghai stock market index as an example, it is considered that the Shanghai Composite Index is more than 2000 points more reasonable.From the current point of view, this view is somewhat hasty and biased.The country hopes that the securities market will develop healthily and protect the little enthusiasm left by investors.In March and July 1994, the management announced the "four no policies" and "three positives", which directly triggered the launch of the two market prices that year.Since then, whenever the stock market is in a downturn, the management has taken regulatory measures and introduced favorable plans.Under the policy goal of promoting economic development and expanding domestic demand, the status of China's stock market has been widely recognized. People have more comprehensively examined this fledgling market and given it a reasonable position.We have noticed that the policy center of gravity is very inclined to the stock market, and the management has taken great care of the stock market, which has undoubtedly created a good atmosphere for the development of the stock market.

Of course, the country does not want to see excessive speculation in the stock market, and adopts policy measures to cool down the stock market when it is hot.For example, in the "1995" market in 5.18, when the Shanghai and Shenzhen stock markets were running wild, the management quickly resorted to a magic weapon for regulation: the introduction of new share issuance quotas was like a pot of ice water pouring out the raging fire of speculation, and the Shanghai stock market plummeted within a day 150 points. At the end of 1996, when the stock index was rising steadily, the management took measures to cool down. The authoritative "People's Daily" special commentator article "Correct Understanding of the Current Stock Market" made the stock market temporarily quiet. In May 1997, the Shanghai and Shenzhen stock markets rose rapidly, showing an unstoppable trend. The management introduced strong measures one after another to control the situation. At this time, the power of the policy was fully revealed, which was beyond the reach of any technical analysis.

Therefore, grasping the changes in the country's policy orientation and attitude towards the stock market can help us judge the general trend and make investment decisions in a timely manner.

[-]. The impact of market size on stock price
The stock market is the same as other markets. The rise and fall of stock prices are also affected by the relationship between supply and demand. When the stock market is in short supply, the stock price will rise accordingly; when the supply exceeds demand, the stock price will fall.The specific manifestation is that when the buyer is greater than the seller (that is, when the long side is stronger than the short side), the stock price rises; market conditions.

Therefore, the number of varieties and issuance of stocks has a major impact on the rise and fall of stock prices.The increase of listed companies, the increase of stock varieties and the expansion of issuance volume make the market size bigger and bigger.This not only shows the scale and level of a country's use of the stock market to raise funds, but also a sign of investors' recognition and investment enthusiasm for securities investment, and a symbol of the prosperity of the securities market.

There is no doubt that the expansion of the stock market will have a direct impact on the volatility of stock prices.In emerging markets with a small stock market, due to the prominent contradiction between supply and demand, there is a phenomenon of too many monks and too little food, and the situation of buying stocks often occurs, which leads to skyrocketing stock prices and the phenomenon of speculating on the winning lottery.Affected by this, the fluctuation of stock price often leads to big ups and downs, skyrocketing and plummeting.When the stock market expands to a certain scale, the relationship between supply and demand reaches a certain level of balance, and investors have already made choices about the types of stocks. on stock types.At the same time, due to the expansion of the market scale, it is more difficult for a small number of large institutional investors to manipulate the stock market and make wild speculations, which is conducive to the healthy and stable development of the stock market.

Another change brought about by the expansion of the stock market is the dispersion of funds. Newly listed stocks will inevitably attract part of the funds, thus dispersing the funds occupied by the original stocks.As far as the total amount of social capital is concerned, it is relatively fixed.The issuance and listing of new shares will cause part of the off-market funds to enter the stock market, but it will also cause part of the on-market funds to flow into the new shares.This will inevitably lead to certain changes in the relationship between supply and demand, leading to fluctuations in stock prices.Generally speaking, the continuous listing of new shares and the accelerated steps of expansion often make the stock price fluctuate.

After more than 10 years of development, my country's securities market has now reached a considerable scale.According to the latest statistics, as of the end of November 2000, the total market value of stocks in my country's securities market has exceeded 11 trillion yuan, which is about 4.6% of GDP.In 50, there were only a dozen listed companies in my country, the stock market value was only more than one billion yuan, and the annual transaction volume was only a few billion yuan.And now the annual transaction amount has reached 5500 trillion yuan.

[-]. The impact of psychological factors on stock prices

Psychological factors refer to the impact of investors' psychological conditions on stock prices.There are many factors that cause changes in investors' psychology. Sometimes even rumors and rumors can cause investors to rush to buy or sell a certain stock, which will cause the stock price to rise or fall sharply.Therefore, in the stock market, psychological factors play a very important role.Its main performance is:
([-]) Investment psychology multiplier.

It means that investment psychology has a multiplier effect on the stock price.When the stock market starts to rise, people are optimistic about the market, so they rush to buy, resulting in a shortage of supply, which prompts the stock price to rise further.The further rise in prices will induce people to buy more, and at the same time drive some newcomers to join the stock market, resulting in a more tense relationship between supply and demand, and prices continue to rise.On the contrary, when the price falls, people are afraid that the price will fall further, and they will sell it one after another, resulting in an oversupply, and the price will fall even more.The lower the price, the more people sell, and the more supply exceeds demand, the stronger the price decline. In the first half of 1991, the share price of the Shenzhen stock market plummeted. Investors' psychological factors were one of the main reasons.Investment psychology has a tendency to be more optimistic when the market is good and more pessimistic when the market is down.Economic factors will cause small fluctuations in stock prices, and the investor's psychological multiplier will turn such small price fluctuations into large fluctuations, which will amplify the range of stock price fluctuations.

([-]) Investment preference.

It means that investors always prefer a certain type or several types of stocks when investing in stocks, especially the types of stocks that they like and often do.Investors who often buy a certain type of stocks, no matter how they go around when doing stock trading, finally choose the stocks they often buy as their investment targets.The reasons for investment preferences are firstly due to different investment motivations. For example, investors who like prudent stocks are motivated to obtain stable dividend income; Speculative stocks move in and out.Such investment preference will lead to more stable prices of stocks with stable prices, and more unstable prices of stocks with large price fluctuations.There are other reasons for the generation of investment preferences, such as information sources, operating habits, living and working environments, and so on.

([-]) Too expensive and too cheap.

Some investors only know that they can make a profit by buying stocks. If they want to make a profit, they will buy cheap stocks, that is, stocks whose prices have fallen, and will never buy stocks whose prices have risen sharply, in order to be safe.This investment tendency to increase the demand for low-priced stocks and reduce the demand for high-priced stocks will inevitably affect the changes in stock prices.

([-]) Blindly following trends.

Some investors are easily affected by the trend of stock trading in the market, especially the behavior of large investors. When they see others buying and selling stocks one after another, they are afraid of falling behind and making no profit, so they rush to follow the trend blindly.Once there is a large amount of stock selling and the stock price drops, they will panic and rush to sell the stock in order to minimize the loss.The stronger the follow-up, the more serious the stock price will fall.Sometimes, rumors and hearsay can also affect the movement of stock prices.Investors follow closely when they see others rushing to buy or sell stocks because they don't know the truth.For example, in the Shenzhen stock market, which had always been deserted, in the spring of 1988, a self-employed individual went to the chairman of Jintian Co., Ltd. and asked for a back door to buy 5 shares.This rumor spread like wildfire, affecting the nerves of many investors on the sidelines.Immediately, a long queue of stock subscriptions appeared at the gate of Jiajia Securities Company all night long, and all 100 million shares of Jintian stock were sold out within five days.

([-]) Man-made speculation.

Man-made speculation will also have a great impact on the changes in stock prices.For example, a very small number of people use inside information and other artificial influences to speculate in stocks, make large inflows and outflows, and short-term trading in order to make huge profits.Some speculators "fry" the stock price high or "fry" low, take in at a low price and sell at a high price, and induce speculation among the public, prompting ordinary small investors to blindly follow suit and speculate in stocks, artificially affecting the stock price.In order to protect the normal trading of the stock market, various countries have formulated relevant laws in order to control the influence of this artificial speculative factor on the stock price to the greatest extent.

(Section [-]): How stocks are listed
[-]. Basic principles of stock listing
The stocks issued by joint-stock companies can be publicly listed on the stock market (stock exchange) for listing and trading activities after being approved by relevant departments.To be listed and traded, stocks must meet certain conditions and operate and operate according to certain principles and procedures.

In stock trading, in order to effectively protect the interests of investors and not harm the public interest, the following principles are generally followed in the process of listing stocks:
([-]) The principle of openness

The principle of openness is the basic principle that should be followed when a stock is listed.It requires that stocks must be publicly issued, and listed companies must continuously and timely disclose the company's financial statements, operating conditions and other relevant materials and information, so that investors can obtain sufficient information for analysis and selection, in order to maintain investors' confidence. Benefit.

([-]) The principle of fairness

It means that everyone, every institution or department involved in securities trading activities must reflect the situation from a fair and objective standpoint, and must not conceal, cheat or resort to deceitful behaviors that cause others to misunderstand.

([-]) Principle of fairness

It means that all parties involved in stock listing and trading, including securities firms, brokers and investors, should have equal conditions and opportunities in trading activities.

([-]) Principle of voluntariness

It means that in various forms of stock trading, the premise must be voluntary, and there must be no rigid apportionment, arbitrary obstruction, or any additional conditions.

The stock listing conditions stipulated by each stock exchange vary, but all include the following items:

(1) Capital amount.It is generally stipulated that the paid-in capital of listed companies shall not be lower than a certain value.

(2) Ability to acquire.Generally, the ratio of after-tax net income to total capital is used to reflect profitability, and this ratio generally cannot be lower than a certain value.

(3) Basic structure.The capital structure is generally reflected by the ratio of the net property value of the latest year to the total assets, and this ratio should generally not be lower than a certain value.

(4) Solvency.Generally, the ratio of current assets to current liabilities (current ratio) in the latest year is used to reflect the solvency, and this ratio generally cannot be lower than a certain value.

(5) Shareholding dispersion.It is generally stipulated that the number of shareholders of a listed company shall not be less than a certain value.

[-]. Conditions for stock listing
Generally, the following documents should be submitted to the exchange for stock listing application:

(1) Listing application;

(2) The listing report, which shall specify the main business status, main financial status, stock issuance and transfer status, matters that may affect stock price fluctuations and avoid abnormal market conditions:
(3) Documents approving the issuance of shares;

(4) Articles of Association;
(5) The resolution of the board of directors on the application for listing;
(6) Certificate of company registration;

(7) Register of shareholders;
(8) The balance sheet and profit and loss statement of the company registered by an accounting firm and certified by an accountant for the last two years and from January of the current year to the month before the application date;

(9) Written recommendation certificates of exchange members;
(10) Description of stock transfer matters;

(11) Explanation of the announced items of the operating status.

After a listed company's securities are listed, if any of the following situations occurs, the stock exchange may also stop trading or even terminate the listing of a certain listed securities after the stock exchange reports to the competent authority - the Securities Management Commission for approval:

(1) A major restructuring of a listed company or a major change in the business scope of the listed company does not meet the listing standards.

(2) Listed companies do not fulfill statutory disclosure obligations or financial reports, and other documents submitted to the stock exchange contain false records.

(3) The actions of directors, supervisors, brokers, and shareholders who hold more than 5% of the listed company's actual issued share capital are detrimental to the interests of the public.

(4) The average monthly trading volume of the listed company's stock trading in the last year is less than 100 shares or there is no transaction record in the last three months.

(5) The operating conditions of the listed company are not good, and the company has lost money continuously in the last two years, or the listed company is facing bankruptcy.

(6) The listed company was suspended from business dealings with the bank due to its credit problems.

(7) The listed company does not pay the listing fee for one consecutive quarter.

(8) Other reasons cause the listed company to suspend listing.

In addition, during the period when a listed company's stock is issued additionally or distributes stock and dividends, its stock will also be automatically suspended from listing.

If the problem of a listed company is relatively serious, or one of the following situations occurs, the stock exchange may make a decision to terminate the listing qualification of the company in question after reporting to the relevant securities authority for approval:

(1) The circumstances listed in the suspension of listing of listed companies have caused serious consequences.

(2) The listed company fails to effectively eliminate the reasons for the suspension of listing during the suspension period.

(3) The listed company will be dissolved and go into bankruptcy liquidation.

(4) The listed company must terminate its listing due to other reasons.

(End of this chapter)