Chapter 1614 [Splitting and Reorganization]
"Now that we have decided to launch new indexes and a large number of ETFs, can we let out some news 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. Everyone will sell the New Certificate 50 ETF in advance and sell those super large-cap stocks. 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 force 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 and achieve this goal, and then it will not fall again. Late.
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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 pondered 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 listing." Fang Hong nodded and said with a smile: "Xingyu Technology was split into three, and its three major phenomenal product departments were separated. 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 and 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 contrary, when the market is in a bearish trend, the mobile phone industry has a negative impact, and the stock price will fall. However, at this time, the new energy vehicle industry is very hot, and the stock price is dragged down by the negative impact of 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 Auto. There will be no problem in the smartphone industry during the same period. The stock price of Xingyu Mobile will not be affected. The same is true for MIX headsets. .
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, 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 three subsidiaries after the split cannot have an equal market value, because they have different industry attributes, different businesses, different valuations, and different asset proportions. The market value of the three stocks cannot be the same.
However, 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, they will continue to hold, and if they are not optimistic, they will sell.
Perhaps after the split, there will be some deviations in the valuation, which fails 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 the shareholders, the other two stocks he holds are undervalued, but the Xingyu Automobile stock is overvalued, which offsets each other. There is no advantage or loss. In short, the holding market value of Xingyu Technology is 1 million, and the total holding market value will still be 1 million when it is split and listed into three stocks.
As for how the three stocks will go after the split and listing, that is another matter.
After some discussion, it was finally decided to split Xingyu Technology and Matrix Quantum into three companies, and re-list the reorganized subsidiaries.
If the two companies are not split, their market value will account for more than half of the total market value of the entire SGX market. A healthy market allows the emergence of large weight stocks, but the extreme situation of two companies accounting for more than half of the market value is obviously problematic.
Splitting the two companies into six companies for listing can also prevent the SGX market from falling into a market with great ups and downs in the future, and the entire market will be kidnapped by the performance of one or two companies.
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