In this way, IPO companies will not blindly pursue high price issuance, but will pay attention to the rationality of IPO price. Otherwise, the new shares are broken and need to maintain stability. For the company, it is to lift a stone and hit itself in the foot, so the company can’t afford to weigh it.

On November 16, PICC was successfully listed on the A-share market. As an important symbol of successful listing, the company’s stock also walked out of the trend of continuous trading limit after listing. In the first three trading days of listing and trading, PICC’s share price rose by the limit.

The successful listing of PICC is, of course, related to the warming of the current stock market and the reduction of the company’s issuance. PICC originally planned to issue 4.599 billion shares, but eventually reduced to 1.8 billion yuan, while the IPO scale was only 1.011 billion shares. Of course, there is another bright spot for the successful listing of PICC, which is the effective measures taken by PICC to maintain the stability of stock price.

At present, when A-share new companies are listed, they will disclose a “plan to stabilize the stock price within three years after the company is listed”. According to this plan, within three years after the listing of the company’s A-share shares, if it is not caused by force majeure, when the closing price of the company’s A-share shares is lower than the company’s latest audited net assets per share for 20 consecutive trading days, the company will take corresponding measures to maintain the stability of the stock price, such as share repurchase, increase of holdings by major shareholders, etc. This “stability maintenance plan” is actually a common format for all issuers. As the net assets per share of newly listed companies are usually far lower than the issue price and the market price after the listing of shares, these “stability maintenance plans” of newly listed companies usually can not maintain the stability of the company’s share price.

However, PICC’s “stability maintenance plan” is different from most companies. Although the “stability maintenance plan” of PICC is also a common format, the actual situation of PICC is different from that of most companies. For many IPO companies, the issuing price is much higher than the net assets per share. Therefore, for these companies, even if the share price breaks and investors suffer heavy losses, the share price has not fallen to the net asset value per share. Therefore, the “stability maintenance plan” of these companies is just a deaf ear and a decoration. However, the situation of PICC is different. The issuing price of its new shares is 3.34 yuan or even lower than the net assets per share of 3.42 yuan. In this way, for investors of PICC, the “stability maintenance plan” of PICC is not a decoration. When the stock price is really broken, it may not be broken, but just broken net, PICC will maintain stability. Therefore, PICC’s “stability maintenance plan” is of practical significance to investors.

Moreover, as an integral part of the stability maintenance plan of the Chinese people, the Ministry of finance, the major shareholder of the company, clearly promises that if the closing price of the A-share shares of the company’s initial public offering is lower than the offering price for 20 consecutive trading days within 6 months after listing on the stock exchange, or the closing price at the end of 6 months after listing is lower than the offering price, the lock-in period of the shares of the company held by the Ministry of finance will be automatically extended for 6 months. If the shares of the company held by the Ministry of finance are reduced within two years after the expiration of the lock-in period, the reduction price shall not be lower than the issue price of the company’s initial public offering of a shares. In other words, the Ministry of finance, the major shareholder of PICC, clearly takes the issue price as the reference price for reducing its holdings, that is, it regards the issue price as a “stable price”.

This is undoubtedly an important contribution of PICC’s listing to the stability of the A-share market. The IPO price will be used as the stability maintenance price of the IPO company. This is more practical than the current IPO companies regard net assets per share as maintaining stable prices.

First of all, this move can better reflect the significance of “maintaining stability”. Because for many newly listed companies, the issue price is much higher than the net assets per share. When the company’s share price falls below the issue price, the company’s share price is already very unstable. The issue price of some companies has even fallen below 50% or more and has not yet touched the net asset value per share. At this time, the company still does not need to “maintain stability”, which is obviously a disregard for the market and the company’s share price. In this way, the “stability maintenance plan” will not have the effect of maintaining stability. Therefore, based on the reality of stock price instability, to effectively maintain the stability of stock price, it is necessary to take the issue price as the “stability maintenance price” of newly listed companies.

Secondly, this is conducive to protecting the legitimate rights and interests of public investors. The issue price is the price at which the IPO company sells its shares to public investors, which is also where the shareholders’ rights and interests of public investors lie. Falling below this price means that the interests of investors have been damaged. Therefore, based on the need to protect shareholders’ rights and interests and the legitimate rights and interests of investors, it is necessary to determine the stability maintenance price of IPO companies as the issuance price of new shares.

In addition, determining the issue price as the stability maintenance price of newly listed companies is also conducive to the rational issuance and financing of IPO companies. At present, listed companies in the A-share market always hope to set the issue price as high as possible during IPO. This pricing method of high price issuance actually transfers the investment risk of stocks to investors, and the company does not need to bear any responsibility for it. However, if the issue price is determined as the stability maintenance price of the newly listed company, the IPO company needs to bear the responsibility for its high price issue. In this way, IPO companies will not blindly pursue high price issuance, but will pay attention to the rationality of IPO price. Otherwise, the new shares are broken and need to maintain stability. For the company, it is to lift a stone and hit itself in the foot, so the company can’t afford to weigh it.

(the author of this article introduces: a financial commentator. After 20 years of stock market training, he has developed his unique vision and opinions on the stock market. He is the author of the book “easy speculation in stocks”.)