Today (December 23), the Small Cap stocks in the A-share market experienced a significant decline, with the Wind Small Cap Index dropping over 5%, the CSI Midcap 200 Index falling over 3%, and the CSI 1000 Index down by 1.8%. Over 4,500 stocks in the Shanghai, Shenzhen, and Beijing markets fell, with 68 stocks hitting the limit down, while more than 800 stocks increased.

According to Historical Data, the Calendar effect of Small Cap stocks shows that in late December, January, and April, due to the severe disclosure of annual reports, the winning rate significantly declines, resulting in an overall downward trend, while February tends to show an overall upward trend.

Taking the Wind Small Cap Index as an example, data from the past 10 years shows that from 2015 to the present, January only saw increases in 2015 and 2023, while the other years experienced declines; February saw only declines in 2018, 2019, and 2024, with increases in other years.

Several companies or their actual controllers are under investigation.

During the weekend, a wave of investigations swept through the A-share market, with several listed companies being investigated in just two days. This includes Mogao Co., Ginwa Enterprise(Group) Inc., Tiantong Co., Eoptolink Technology Inc., and Xunida.

In addition, nearly 30 companies received regulatory letters, administrative penalties, etc., such as CITIC SEC, China International Capital Corporation, Shenzhen Bingchuan Network, and so on.

The strictest delisting new regulations will be implemented; which companies face risks.

It is noteworthy that the disclosure of performance by listed companies in 2024 is about to begin, and on January 1, 2025, the strictest "delisting new regulations" in history will be fully implemented. Companies whose performance indicators do not meet the standards set by the delisting regulations will be subject to "ST" or "*ST" treatment after the official disclosure of the annual report.

The delisting regulations clarify that, based on the previous mandatory delisting for continuous fraud at a certain proportion for 2 years, new standards have been added for severe fraud for 1 year and continuous fraud for 3 years or more, as well as new standards for fund occupation and internal control being issued with an inability to express an opinion or a negative opinion.

At the same time, the financial delisting indicators have been further tightened, raising the operating income standard for loss-making companies on the Main Board from 0.1 billion yuan to 0.3 billion yuan. The delisting standard for Market Cap has also increased, with the delisting indicator for A-share Main Board listed companies raised from below 0.3 billion yuan to below 0.5 billion yuan.

According to the disclosed 2023 annual reports and the first three quarters of 2024, currently among all over 5,000 listed companies in the A-share market, 66 companies are at risk of being flagged as "*ST."

Appendix: List of stocks to watch out for.