In recent weeks, the stock market has been relatively stagnant, oscillating at lower levels, yet an interesting trend has emerged within the ST (Special Treatment) stocks segmentA notable shift occurred as several ST stocks experienced a remarkable rotation rally, with a significant number of them hitting the upper limit of daily price changesThis phenomenon has raised questions about the changing investment preferences in the market, particularly highlighting the speculative nature underlying the enthusiasm for ST stocks.
On September 21, a variety of ST stocks surged simultaneouslyStocks like *ST Xin Hai, *ST Rong Tai, *ST Xi Fa, *ST Zhong Jie, and ST Tong Pu all achieved the coveted “5 cm” daily limit increaseNevertheless, this behavior isn't new to the realm of ST stocks; prior to this rally, there were already instances where these stocks defied the market's downward trend, showcasing robust performances
A comprehensive review indicates that, as of September 20, out of 118 ST stocks tracked, 86 have demonstrated gains since the beginning of the month, which accounts for more than 70% of the sampleAdditionally, 25 of these stocks boasted increases exceeding 10%, while notable mentions like *ST Fan Hai, *ST Xi Fa, and *ST Rong Tai had gains surpassing 20%, and both *ST Fan Hai and *ST Xi Fa saw their values increase by over 50%.
Looking at a broader timeline, from July onwards, several ST stocks, including *ST Fan Hai and *ST Xi Fa, have doubled in value, showcasing the significant volatility characteristic of this market segmentST stocks generally indicate a higher risk as they are classified under significant danger warnings or delisting alerts, resulting in an overall smaller market capitalizationCurrent data for the ST segment reveal that the average market capitalization of 118 stocks stands at approximately 3.624 billion yuan; quite a few are valued below 3 billion yuan, with some, such as ST Mei Xun, ST Bu Sen, and ST Shen Tian, falling below 1 billion yuan.
Analyzing the sector distribution of these ST stocks illustrates their diversity, extending across various industries such as pharmaceuticals and biotechnology, telecommunications, social services, retail trade, agriculture, construction, computer technology, textiles, electronics, and electrical equipment
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These stocks attract attention not only because of their potential financial maneuvering but also due to their current precarious situations.
Senior investment consultant at Jifeng Investment Advisory, Weng Zichi, provided insights asserting that the current market rally of ST stocks can be attributed to a few critical factorsOn one hand, the overall market liquidity appears constrained, pushing speculative funding toward smaller, less capitalized ST stocks as a safe haven for short-term tradingOn the other hand, issues surrounding margin trading and quantitative funds have taken the forefront in media discussions, contributing to a scenario where ST stocks, which do not engage in margin financing, have been largely overlooked by quantitative investorsThis has consequently led speculative investors to gravitate toward short-term trading within this segment.
Compared with non-ST stocks, ST stocks exhibit a stronger requirement for restructuring and asset reorganization efforts
A close inspection reveals that among those ST stocks showing prominent increases lately, many are entangled in restructuring processesRecent statistics indicate that *ST Xi Fa, ST Zhou Ji, *ST Rong Tai, and *ST Zhong Jie, which have all seen significant increases, are among those involved in such restructuring dynamics.
Since September commenced, *ST Xi Fa's stock has surged nearly 60%. Recently, the company issued a risk warning concerning unusual trading activity, announcing that it is in a pre-restructuring phase, thus the certainty of entering formal restructuring remains unknownSimilarly, ST Zhou Ji disclosed information about the court's acceptance of its restructuring efforts and the appointment of a management team.
Additionally, other ST companies are unveiling acquisition dynamics
For instance, ST Tong Pu has observed consecutive limits on its price since September, and recent acquisitions indicate that the purchaser has a positive outlook on the company's future direction, intending to increase ownership through this dealFurthermore, *ST Zhong Qi recently shared an asset sale and consolidation draft report, highlighting evolving dynamics for their operations.
Amid these developments, numerous ST firms have disclosed share repurchase plans and increased ownership stakesObservations indicate that *ST Fan Hai recently announced its major shareholder's intention to purchase additional shares on the secondary market, with a budget ranging between 100 million yuan and 200 million yuanThe company's primary business concentrates on real estate and finance, and with recent favorable policies in the real estate sector, along with its buyback initiatives leading to stock price surges, *ST Fan Hai has emerged as a front-runner within ST stocks.
Despite these apparent opportunities, Weng Zichi warns that ST stocks remain susceptible to speculative activities in the short term with limited investment value