According to the Zhixin Finance APP, Zhongtai released a research report stating that the official version of the market cap management guidelines has been implemented, which will gradually promote the reasonable reflection of investment value in listed companies and their quality, benefiting the capital markets in the long term. It is recommended to pay attention to the brokerage industry, which is expected to benefit from the increased activity in the capital markets and the anticipated increase in industry concentration under mergers and acquisitions. Specific stocks to watch: Dongcai (300059.SZ), Citic, Huatai, Guojun, Zhongjin, and Yinhe.

Background of the market cap management policy:

1. The new 'National Nine Articles' establishes a tone: encouraging market cap management, mergers and acquisitions, and dividend repurchases. In April 2024, the new 'National Nine Articles' proposed to promote listed companies to enhance their investment value.

2. Since the beginning of the year, the deepening reforms of the capital markets and the State-owned Assets Supervision and Administration Commission's continued attention to market cap management have led to a series of relevant meetings.

Main content of the official version of the market cap management guidelines:

1. Clearly define market cap management. Market cap management should be based on improving company quality, in accordance with laws and regulations, using mergers and acquisitions, stock-based incentives, employee stock ownership plans, cash dividends, investor relations management, information disclosure, and share repurchases.

2. Clarify the responsibilities and obligations of relevant entities. Responsibilities and obligations of the listed company's board of directors, directors, senior management, controlling shareholders, and other relevant entities have been clarified.

3. Clarify special requirements for two types of companies. First, companies that are major constituents of the index should establish a market cap management system and clarify specific responsibilities; second, long-term broken-net companies should disclose valuation enhancement plans.

4. Clarify prohibited activities. Raise compliance awareness and do not engage in market manipulation, insider trading, illegal information disclosure, etc., in market cap management.

The official version of the market cap management guidelines has some changes in compulsion and wording compared to the draft for comments:

1. Increase the coverage index for which a market cap management system should be established. In addition to the csi 300 index, sse science and technology innovation board 50 index, sse science and technology innovation board 100 index, gem price index, and north exchange 50, add the cs index A500 and gem middle cap 200 index.

2. Only long-term broken-net companies with a pb below the industry average are required to establish valuation enhancement plans and provide specific explanations, rather than all long-term broken-net companies as stated in the draft for comments.

3. No longer require disclosure regarding the market cap management system, only the establishment status should be disclosed.

4. Clarify regulatory measures, which may include ordering corrections, supervisory talks, issuing warning letters, etc.

5. An additional duty of the secretary to the board of directors is to promptly report significant public opinion that may affect the company's stock price to the board of directors.

The logic and path of this round of market cap management:

1. The theoretical logic of market cap management - a positive feedback loop from value creation to value realization. For listed companies, market cap management is a long-term global strategy process: P=EPS*PE.

2. Market cap management needs to coordinate efforts across three dimensions: value creation, value transmission, and value realization. Increase the inherent value of the listed company → EPS - choose an appropriate way to communicate the company's value to the capital markets → PE - the value of the listed company is recognized by the capital markets → P.

3. The cycle of this round of market cap management is significantly different from the "12-15 years". This round is under the overall tone of "strict regulation" in financial supply-side reform, promoting long-term healthy development of the market by continuously enhancing the value of listed companies.

Investment suggestions: It is recommended to pay attention to the brokerage industry that benefits from the increased activity in the capital markets and the expectation of improved industry concentration under mergers and acquisitions. Individual stocks to pay attention to: Dongcai, CITIC, Huatai, Guojun, CICC, and Yinhai.

Risk warning: Market volatility is increasing; unexpected economic downturn.