"Now that we have decided to launch new indexes and a large number of ETFs, can we make some noise in the near future to explore the market's reaction?" a manager participating in the meeting suggested at the end of the meeting.
As soon as these words came out, Fang Hong disagreed: "It's better to suppress it first and wait until this year."
There is still more than a month left, and 2020 will come to an end. Fang Hong wants the NSE 50 Index to reach the 10,000-point mark within this year, so this news cannot be released within the year.
Because this news is negative for the SGX 50 Index in the short term, the SGX market will launch three new indexes and a large number of industry ETFs, which will inevitably take away most of the liquidity from the SGX 50 ETF.
It is definitely negative for the NSE 50 Index.
Currently, the majority of investors have only one channel to invest in the SGX market. To put it bluntly, most people can only buy the SGX 50 ETF.
However, with the launch of the NSE 500 Index, the NSE 1000 Index and the NSE Composite Index, as well as the launch of corresponding index ETFs and a large number of industry ETFs, there will definitely be many investors who will transfer the funds originally intended to buy the NSE 50 ETF to these
New ETF varieties.
Although it will take time for these three new indexes and ETFs to be officially launched, as soon as the news is released, expectations will be formed.
At that time, the market will react first, and everyone will sell the New Certificate 50 ETF and those super large-cap stocks in advance. The selling pressure will increase here, and OTC funds will not easily enter the market, waiting for the new ETF to come out.
The SGX 50 Index is bound to fall in the short term.
As long as the outside world knows about this, this period of decline in the NSE 50 Index will definitely occur, and Fang Hong will not forcefully cover the bottom. The price is too high.
The NSE 50 Index broke through the 10,000-point mark. This is a very critical historical point that will be recorded in history. First, raise the index to 10,000 points, achieve this goal, and then it will not fall again.
Late.
…
After the meeting, Fang Hong left the SGX headquarters building. The outside world did not know that he had made this trip, nor did they know that SGX held such a seminar internally.
Fang Hong returned to his villa at home and directly contacted Qin Feng, who was in charge of Xingyu Technology, and Chen Yu, who was in charge of Matrix Quantum.
The video chat between the two people was still to solve the "top-heavy" problem of the SGX market. Fang Hongyan said concisely and comprehensively: "The title of 'big and small king' in the SGX market should be removed."
After hearing this, Chen Yu thought for a moment, and then said with an uncertain tone: "Boss, do you mean to split up and reorganize the two companies Matrix Quantum and Xingyu Technology?"
Chen Yu's simple words spoke to Fang Hong's heart, and that was exactly what he thought.
"Yes, to be precise, it is a split and listed." Fang Hong nodded and said with a smile: "Xingyu Technology was split into three, and its three major phenomenal product departments were separated, and the new energy vehicle department was independently established as 'Xingyu Technology'"
Automobile' and focus on the field of new energy vehicles, including the smartphone department including the MIX head-mounted display department."
Fang Hong continued: "Xingyu Technology was taken out as the parent company of these three independent subsidiaries, and these three subsidiaries were split and listed."
The reason why we decided to split and list these two super giants is because the market value is too concentrated, which can easily lead to extreme market conditions in the future.
For example, when the market is in a bullish trend, Xingyu Technology's smartphones are good and the stock price rises, the new energy vehicle department is good and the stock price rises, and the MIX head display is good and the stock price still rises.
On the other hand, when the market is in a bearish trend and the mobile phone industry performs poorly, the stock price will fall. However, the new energy vehicle industry is very hot at this time, and as a result, the stock price is dragged down by the negative news from the smartphone industry.
It can be seen that either it will continue to fall or it will continue to rise, which does not reasonably reflect normal market conditions.
If there is a spin-off and listing, there will be no such problem. If the new energy vehicle industry has a negative impact, then just drop the stock price of Xingyu Automobile. During the same period, there will be no problem in the smartphone industry. The stock price of Xingyu Mobile will not be affected. The same is true for MIX headsets.
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In this way, they can reasonably reflect the actual market conditions of their respective industries, and at the same time solve the problem of "top-heavy" capital concentration on the SGX market.
Matrix Quantum also plans to split it into three independent subsidiaries and list them on the market. Matrix Quantum will be taken out as the parent company of the group.
Neither Qin Feng nor Chen Yu had any objection to this, because the company's split and reorganization would have no actual impact on them. They are still the heads of the two technology groups, and the same is true for Qunxing Group, and their rights and interests are not the same.
It has not been diluted, it has just been further subdivided.
After a while, Qin Feng said: "I have no objection to splitting and listing, but how to split the current shareholders' equity?"
Fang Hong said with a smile: "This is very simple. After the company is split, each company will allocate its valuation and divide it in equal proportions. It is nothing more than changing from holding one stock to three."
Assume that after Xingyu Technology is split into three subsidiaries, the market values of the three subsidiaries are different. At this time, an investor holding Xingyu Technology shares, assuming that the market value of his position is 1 million yuan, will become a shareholder holding three subsidiaries after the split.
The market values of these three stocks are 350,000, 400,000 and 250,000 respectively, which still adds up to 1 million.
It's just that the market values of the three subsidiaries after the split cannot be equally divided. Because the industry attributes are different, the businesses are different, the valuations are also different, and the asset proportions are also different. Naturally, the market values of the three stocks cannot be the same.
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But for investors or shareholders who currently hold Xingyu Technology, their total equity will remain unchanged after the split.
After the three companies are split and listed, the stock prices will go their own way. If the holders are optimistic about it, they will continue to hold it. If they are not optimistic about it, they will sell it.
Perhaps after the split, there will be some deviations in the valuation, failing to truly reflect the market value of the three subsidiaries. For example, the new energy vehicle department may be overvalued, and the other two departments may be undervalued.
For shareholders, the other two stocks he holds are undervalued, but the Xingyu Automobile stock is overvalued, and they offset each other. There is neither an advantage nor a loss. In short, it belongs to Xingyu Technology
At that time, the market value of the position was 1 million. When it was split and listed into three stocks, the total market value of the position would still be 1 million and would not change.
As for what will happen to the three stocks after they are split and listed, that is another matter.
After some discussions, it was finally decided to split both Xingyu Technology and Matrix Quantum into three companies, and the reorganized subsidiaries would be relisted.
If these two companies do not split up, then the market value of the two companies will account for more than half of the total market value of the entire SGX. A healthy market allows the emergence of large heavyweights, but the market value of the two companies will account for more than half of the total market value.
More than half, such an extreme situation of two dominant companies is obviously problematic.
Splitting the two companies into six listings can also prevent the SGX market from falling into ups and downs in the future, where the trends of one or two companies will hijack the entire market.