Financial Services Association, Feb. 26 (Reporter Yan Jun) Exchanges emphasize monitoring abnormal trading behavior, yet capital always has the upper hand.

Last Friday, the Shanghai and Shenzhen Exchange stated that it will focus on monitoring delisting risk warning stocks that have recently fluctuated a lot. Among them, the Shenzhen Stock Exchange directly named *ST Zuojiang.

On February 26, *ST Zuojiang rallied after opening. At one point, it rose and stopped 20CM during the intraday period. The turnover exceeded 200 million yuan, and the turnover rate was nearly 15%. By the close, it had declined slightly, and the final increase was more than 10.95%.

A lawsuit was filed by the Securities Regulatory Commission on suspicion of illegal disclosure of information. The company issued three consecutive delisting risk warning notices, and Huaan Securities, which published a “buy” research report, was subject to regulatory measures. Even so, *ST Zuojiang has been continuously hyped up with funds since this year. Who is buying it?

*ST Zuojiang who “jumps up and down”

*ST Zuojiang, who wears a hat with a star, has performed a “jump up and down” style since 2023. In just over a year, *ST has gone through a process of doubling up, down by 10%, and then doubling again.

From the end of January to July 17, 2023, under the leadership of ChatGPT, domestic listed technology companies received good gains. *ST Zuojiang continued to promote the concept of DPU (data processing unit), claiming that the company's chip technology process is mature, has the advantages of high performance, programmability, low latency, low power consumption, etc., is more flexible and convenient to use, and the cost is much lower, which can provide more efficient computing services for cloud computing, 5G, artificial intelligence, edge computing, and the Internet of Things. Under active speculation by a series of companies, *ST Zuojiang once rose to 299.8 yuan, known as the most expensive “ST” stock in history.

However, the scam did not last long. On December 1, 2023, the company was investigated by the Securities Regulatory Commission for suspected illegal disclosure of information. At the same time, the announcement disclosed by *ST Zuojiang acknowledged that the company's only single DPU business acceptance confirmation was uncertain. In fact, after ST Zuojiang reached a high position in July of the same year, the stock price went all the way down and fell cliff-style. As of February 7, it reached a low of 13.9 yuan, and the stock price fell more than 94%.

During this period, in mid-January of this year, with no fundamental changes, *ST Zuojiang once again began a sharp rise model. From January 9 to 23 this year, *ST Zuojiang's stock price rose and stopped 5 times, and the range increase reached 111.5%, doubling again.

By January 30, the Securities Regulatory Commission reported on the progress of the phased investigation of the*ST Zuojiang financial fraud case. The CSRC stated that on November 24, 2023, an investigation was opened against the delisting risk company*ST Zuojiang. It has now been initially discovered that the financial information disclosed by ST Zuojiang in 2023 is seriously untrue and is suspected of major financial fraud. The case is currently under investigation, and the Securities Regulatory Commission will find out the facts of the violation as soon as possible and deal with them seriously in accordance with the law.

By February 21, *ST Zuojiang issued a risk warning for terminating the listing for the third time, and a delisting risk warning was implemented from the opening of the market on May 4, 2023. If the final audit results of the company in 2023 are less than 100 million yuan in revenue after deduction, if it triggers the delisting situation stipulated in the “Shenzhen Stock Exchange GEM Stock Listing Rules (revised in August 2023)”, the listing of the company's shares will be terminated.

From *ST Zuojiang's 2023 performance forecast released on January 31 this year, the expected loss is 160 million yuan to 225 million yuan, which is no surprise. *ST Zuojiang's delisting is a probable event.

*ST Zuojiang's abnormal transaction was also fueled by brokerage firms. On January 31, February 25, and March 25, 2023, Zuojiang Technology issued three consecutive announcements that the company's stock trading may be subject to delisting risk warnings, but on April 25, 2023, Huaan Securities issued a research report entitled “Brilliant Pearl in the Field of Computing Power, DPU Volume Multiply”, recommending “buying” Zuojiang Technology.

On February 5 of this year, the Shenzhen Stock Exchange also adopted self-regulatory measures with written warnings against Huaan Securities. The Shenzhen Stock Exchange believes that the analysis findings of the relevant research report issued by Huaan Securities were not sufficiently based, the conclusions were not prudent, did not fully reveal investment risks, and that Huaan Securities did not strictly review the quality of the research report. Subsequently, on February 18, the Anhui Securities Regulatory Bureau, the competent supervisory authority, issued the “Decision on Ordering Corrective Measures against Huaan Securities Co., Ltd.” The Anhui Securities Regulatory Bureau believes that research reports involving “Zuojiang Technology” and the like issued by Huaan Securities were not carefully prepared, decided to take administrative supervision measures to order the company to correct them, and recorded them in the securities and futures market integrity file.

Who is betting heavily on delisting risk stocks?

The market has always had a “tradition” of speculating on ST shares at the end of the year. This is particularly evident from the end of 2023 to January of this year.

First, the market shook the market, and capital was unwilling to sit idle, setting off a wave of hype. In particular, the mentality of capital is clearly worse. Coupled with market sentiment that is resistant to quantification and securities lending, there is a section that states that the ST sector is the last “pure land” for A-shares.

They also compiled this “little essay” as a reason for the hype:

There is no securities financing in the ST sector

ST sector institutional risk control does not allow purchases, and the chips are clean

The ST sector is afraid to buy quantitative capital

ST sector unit price is low

ST sector has not been continuously hyped

The ST sector cannot be bought by foreign investors and will not be shorted

The ST sector is not affected by the rise and fall of the general market

Second, it is also the most important reason. The market bets that ST shares can reverse performance, reverse fundamentals, and “remove the cap” to get rid of the risk of delisting. Such stocks will generally have a good rise in the second year. These “off-cap concept stocks” are hyped up by capital every year.

Judging from the changes in *ST Zuojiang's Dragon Tiger List, they are the main participants in the gambling hype. Since the start of sharp stock price fluctuations in January 2023, *ST Zuojiang has been on the Dragon Tiger List 13 times and participated in the exclusive seat of the top five institutions, only once on January 31, 2023, and reduced positions.

Since this year, *ST Zuojiang has been on the Dragon Tiger List 7 times, and the “Lhasa Sky Group” has appeared many times in the top five sales departments. With January 31 as Lee, *ST Zuojiang's closing price deviation value reached 44% in 3 consecutive trading days. The top 5 seats in the sale were all tourist seats on Dongcai's Lhasa East Ring Road and Tuanjie Road. In terms of style, it is known for its aggressive style, and often appears in stocks that are chasing highs and falling. “Lhasa Tiandan” is often hidden in “stir-fried rice”.

Currently, *ST's delisting in Zuojiang will be a probable event. Regarding “stupid” behavior, industry insiders pointed out that investors should understand that the rise and fall in stock prices is not driven by “cap removal,” but rather an improvement in the company's fundamentals. The return in value has driven the removal of the cap, so don't blindly follow the hype.