Summary of Key Points
After entering the delisting consolidation period, the stock Yunchuangtui (a stock that is about to be delisted) experienced consecutive daily limit-up increases in its price, which has drawn severe regulatory attention from the Beijing Stock Exchange (BSE). The BSE found that almost all of the speculation on this stock came from individual investors (with natural persons accounting for over 99% of transactions), creating a typical "pass the torch" scenario where everyone tries to buy it at a higher price, hoping someone else will pay even more. However, there is no fundamental value behind this stock, as its delisting has already been confirmed. The BSE took measures to curb the speculation by suspending trading for accounts involved in the violations and issuing risk warnings, reminding investors that such behavior carries significant risks and could lead to substantial losses.
Why Can a Delisted Stock Still Experience Limit-Up Increases?
The delisting consolidation period is the last 15 days of trading before a stock is officially delisted (Yunchuangtui's period lasted from July 9 to July 29). Logically, no one should be interested in buying such a stock, as it will no longer be traded on the exchange and essentially become worthless. Yet, Yunchuangtui's price continued to rise due to individual investors buying and selling from each other.
Trading data shows that over 99% of buyers and sellers were natural persons (ordinary retail investors). Market experts describe this as a "pass the torch" situation: everyone hopes to sell at a higher price before the next buyer appears, but no one wants to be the last one to hold the stock. It's similar to the children's game where the person holding the flower when the drum stops loses; in this case, the "flower" (the stock) is worthless, and the final holder will suffer a huge loss.
How Does the BSE Regulate This?
In response to this abnormal speculation, the BSE took immediate action:
- On July 16, it suspended trading for 44 accounts involved in manipulating the stock price and maintaining daily limit-ups.
- On July 17, it went even further by suspending the ability of over 100 accounts to buy the stock unilaterally (only able to sell) for extended periods.
- The BSE also repeatedly issued risk warnings, emphasizing that the stock was about to be delisted and advising investors not to invest in it.
The BSE's stance is clear: there is zero tolerance for speculation on delisted stocks. It uses a combination of key monitoring, trading restrictions, and risk warnings to put an end to the speculation.
How High Are the Risks of Such Speculation?
The fundamentals of Yunchuangtui do not support its current price. Its delisting has been announced, meaning the stock will lose its liquidity (as no one will buy it), and the company itself has no performance or assets that could boost its price.
Market experts warn that stocks without fundamental support will eventually reveal their true value. The current limit-up increases are a sign of a "false prosperity." Once there are no buyers left, the stock price will plummet, just like a bubble bursting. Some previous delisted stocks have seen their prices drop from limit-ups to consecutive daily limit-downs within days, turning into worthless paper, with retail investors losing all their investment.
Why Is the Regulation So Strict?
The BSE is strict for two main reasons:
1. To protect small and medium-sized investors: Retail investors often lack information and tend to follow trends, rushing in when they see price increases, only to end up as the ones holding the losing positions.
2. To maintain market order: If delisted stocks are allowed to be speculated on, people may think that even poor-quality stocks can generate profits, leading to a market where no one wants to buy quality companies' shares, turning it into a gambling environment devoid of real investment value.
In short, the regulation aims to convey a message: don't try to make quick money by speculating in worthless stocks; doing so will only result in greater losses. It's better to invest in companies with genuine value.
Final Reminder
If you know someone who is buying stocks during the delisting consolidation period, advise them that this is not investing but gambling. In a "pass the torch" scenario, the last person to buy always loses, and retail investors are often the ones who suffer the consequences.