Securities Investment Chapter
Chapter Investment Tools
First, the definition of securities
Various types of ownership of property or securities is a generic term debt
Second, security types
(A) of the Securities Category: by nature
1, evidence of securities: a simple fact that documents such as letters of credit, bills of
lading and so on.
2, the certificate securities: obligations that the holder is a valid file, such as deposit
slips, IOUs, etc..
3, PI: on some items of value, has a certificate of authority or certificate. Into
monetary instruments, such as bills, etc.; property securities, such as bills of lading,
etc.; capital securities such as stocks and bonds. People often say the main points of a
class of securities.
(B) securities classified
1, by issuing the main points: government securities, finance and securities, securities
of the Company.
2 embodiment is divided by: Currency Securities (bills of exchange, promissory notes,
checks, promissory notes, etc.), capital securities (stocks, bonds, derivatives, etc.),
cargo security (bill of lading, waybills, etc.).
3, according to whether the listed points: Listed Securities (Stock Exchange- listed
securities), non- listed securities (not listed).
First, the definition of
Refers to the various types of economic entities to finance the commitment to
investors and issued to pay interest and repay principal of the debt maturity debt
(A) reimbursement of: bond must provide for due time to the creditor by the debtor to
pay interest and principal.
(B) Liquidity: You can quickly converted into cash, they will not suffer a greater loss
(C) Security: the general mobility of the higher debt and higher security.
(D) profitability: fixed interest rates, investors can obtain a stable in a certain period
(A) of the main issue is divided into
1, the government&#39;s public debt
A government or government agency to cover the deficit, raise funds for
construction and the return of old debt principal and interest of bonds issued.
(1) national debt
The central government or financial sector bonds.
Including Treasury bills (short-term money market instruments), the medium-term
bonds (1-5 years, usually cut the coupon), long-term government bonds (5 years, can
use a repayment or amortization)
(2) Government agency bonds
Is guaranteed by the central government quasi- government bonds, it is not to state
agencies for distribution, but the issue of their organizations.
(3) local government bonds
By local public authorities for the purpose of economic development, public
construction bonds. Including ordinary bond (for local utilities, local taxes and other
municipal discharge sources), revenue bonds (such as receipts for the security of
infrastructure projects for road, airport and other construction bonds), the limited
public debt (in particular tax revenue payment of interest, such as the U.S. highway
bonds paid by the state gasoline tax), local public enterprise bonds (construction
bonds the city, mainly for urban renewal projects) and so on.
China had issued government bonds are:
(1) key state construction bonds: the energy, transportation, raw materials, finance and
other key construction projects.
(2) National Construction Bonds: additional funds for the former.
(3) Financial Bonds: make up the deficit issue, mainly targeted at financial
(4): 1989-1996 preserve and increase the public debt issued in a period of three years,
to raise funds for construction issue.
(5) special treasury bonds: 89 years later, differentiated from the Treasury out of the
unit body to which a period of five years.
(6) infrastructure bonds: No, as the issue of national institutions, but their bodies to
issue, such as the State Energy Investment Corporation, the state investment company
and other raw materials, mainly used for key construction projects, in 88, 89, 92-year
issue,? period of three years, can not enter the market.
(7) Treasury: China issued since 1981, the purpose of raising funds, Treasury bills
issued to underwrite, subscribe for, etc., interest, repayment of principal in a lump
sum when no compound interest, interest income exempted from tax, Treasury is
available for purchase, but should be approved by the market place at the national
process, there are two kinds of book-entry and certificated, the former can be traded in
the stock, which traded at the bank counter.
2, Financial Notes
A bank or other financial institutions to raise long-term bonds issued by credit funds.
Such as Japan&#39;s interest-bearing bonds, the United States National Bank of
Bonds are generally divided into two, the national financial bonds by the national
financial institutions bonds issued throughout the country, their security is strong,
liquidity is high. Local financial bonds by the local financial institutions, issued in the
region, its security and liquidity than national bonds.
Types of financial bonds issued in China have
(1) General Debt: certificates of deposit, bonds, in the short term, the interest rate
slightly higher than the same period in time deposits, collateral circulation can not,
due a repayment.
(2) discount bonds: issued at a discount, face value repayment by maturity.
Anonymous, do not report the loss, negotiable, generally 1-3 years.
(3) progressive Interest Debt: Floating rate bond deadlines and generally 1-5 years,
which can be cashed in banks, the longer the period of higher interest rates.
3, corporate bonds,
Companies or enterprises to raise funds for the issuance of debt instruments.
(1) corporate bonds: AG to raise funds for the debt certificates.
China&#39;s issuance as follows:
① key corporate bonds: 1987 release, mainly for electricity, petrochemical, steel and
nonferrous metallurgy industry to raise capital.
② Local corporate bonds: state ownership of business enterprises issued, normally
1-5 years medium-term bonds.
③ Short-Term Financing Notes: issued in the country beginning in 1989, mainly to
ease the difficult issue of corporate liquidity, repayment period of less than one year,
you can transfer, but not as a currency.
(2) Non-corporate debt: do not have independent legal status of non-corporate debt
certificates. If Shetuanfaren, sole proprietorship, partnership enterprises.
4, the international bond
Refers to the sovereign governments or large companies and international institutions
in international financial markets bonds.
(1) Foreign Bonds: the borrower&#39;s financial markets in the country other
than the issuance, the issuance of the host country currency denominated debt service.
(2) European bond: the borrower&#39;s financial markets in the country other
than the issuance of not to issue currency, while in another country&#39;s
currency denominated bonds.
January 1982, China International Trust and Investment Corporation in Tokyo,
Japan 10 billion yen capital market bond issuance, the period of 12 years, 8.7%
interest rate, private placement. In 1996 China&#39;s success in the U.S. Yankee
bond issue 10 billion.
(B) the period of sub-debt
1, short-term debt: debt service period of less than one year bond.
2, medium-term debt: debt servicing more than one year, ten years of the bond.
3, long-term debt: debt servicing time in more than a decade of debt.
(C) of the form of credit points
1 credit bonds: bond issuer&#39;s credit alone to guarantee bonds issued. The
general reputation of the company can issue higher, but there are many cons traints on
the distribution companies, such as the debt is not repaid before the shareholders,
subject to such dividends.
2, mortgage bonds: general land, equipment, housing and other real property as
collateral or to other units of its own bonds or stocks as collateral as a guarantee of the
3, secured bonds: repayment of principal and interest is guaranteed by a third party
In addition there are fixed-rate bonds, floating rate notes, progressive-rate bonds,
participation bonds, revenue bonds, tax-free bonds, with a total subscription of new
shares bonds, convertible bonds, bearer bonds, bearer bonds, the exchange of bonds,
private bonds, government-raised bond and so on.
Section III shares
First, the definition of
Limited public offering is to prove the identity and interests of investors, and to get
the dividends and bonuses, according to the certificate.
1, profitability; 2, risk; 3, stability; 4, liquid; 5, shares of scalability (split, merge); 6,
price volatility; 7, participatory decision- making business.
Third, the types of stocks
(A) Ordinary shares (common stock):
1, equity characteristics:
Business participation, profit distribution rights, stock options, the remaining property
distribution, the right to vote, the right to vote.
(1) blue chip (blue chip): the best stock. Large companies are generally the most
popular shares issued, is a good performance, stability, maturity, rich stock dividends.
Such as: Laiwu Steel, in a highly competitive steel industry in 1997 on the market,
calendar year earnings per share 0.57 yuan, 0.46 yuan and 0.43 yuan, 0.6 yuan and
0.52 yuan, and this is accompanied by a secondary placement of shares and
Zhuanzengguben such as the rapid expansion of equity achieved.
(2) growth stock: refers to the rapid sales and earnings growth in the amount of stock,
but its net profit for the company&#39;s expanded reproduction is often so small
dividends, but the company&#39;s growth, so stock prices.
(3) cycle stocks: earnings fluctuate with the economic cyclical fluctuations in the
company&#39;s stock, such as real estate.
(4) the resistance of shares: the economic situation changes slightly, revenue stability,
such as utilities, water, electricity and gas.
(5) Income Shares: The shares will pay higher income, business stability, and
expansion is very low, so its net income into a higher pay dividends.
(6) speculative stocks: The company outlook uncertain, volatile stock price, the
general is engaged in the development or risk the company released the cause. If our
ST, PT stock.
What is the ST, PT shares?
?&quot;T&quot; class of shares of stock, including ST and PT shares.
?April 22, 1998, Shanghai and Shenzhen Stock Exchange announced plans to
financial condition and other unusual financial situation of the stock exchange listed
companies for special treatment (in English for the Special Treatment, abbreviated as
&quot;ST&quot;). One exception refers primarily to two situations: First,
the two listed companies audited net profit of the fiscal year are negative, the second
is a listed company&#39;s most recent fiscal year audited net assets per share,
lower than the value of. Stock in listed companies was introduced during the special
treatment, its stock should follow the following rules: (1) stock quote on price limits
of 5%; (2) change the name of the original equity shares names with
&quot;ST&quot;, such as &quot; ST Steel &quot;; (3) A listed
company&#39;s interim report must be audited.
?PT shares are traded on the stock for the suspension of distribution channels to
provide special services produced by the transfer of stock varieties (PT is the English
ParticularTransfer &lt;Special Transfer&gt; acronym), which is based on
&quot;Company Law&quot; and &quot;Securities Act&quot; the
relevant provisions of , a listed company, and so on three consecutive losses, its shares
will be suspended from listing. Shanghai and Shenzhen Stock Exchange from July 9,
1999, the shares listed on the suspension of the implementation of such
&quot;special transfer service.&quot; PT shares at prices and competitive
bidding is different to normal trade stocks: (1) transactions are different. PT shares
opened only five hours each week within the week can be traded only one day. (2)
different price limits. According to the latest regulations, PT shares rose only 5% limit,
there is no price limit, the risk increase accordingly. (3) match in different ways.
Normal trading day in each transaction set between 9:15-9:25 auction, call auction is
not the declaration of turnover 9:30 into the queue after the continuous auction
transactions. The PT shares of the exchanges after the close of the Friday 15:00 to
all-time on the day to call auction commission declared effective way match, generate
a unique transaction price, the commission declared all eligible are here price. (4) PT
shares as a special assignment services, its trading stock is not traded on a real stock,
so stock is not included in index calculation, the transfer of information can only be
seen in the day&#39;s closing price.
(B) preference shares (preferred stock)
Is a joint-stock companies issued by the company&#39;s earnings and surplus
property distribution priority than common shares of stock.
2, shares the characteristics
Agreed a fixed dividend rate, priority allocation of dividends and liquidation of
surplus property, the right to vote restricted stock may be redeemed or converted into
(1) cumulative preference shares and non-cumulative preference shares:
The former refers to a non-profit company operating year or less pay dividends, then
the subsequent replacement of the annual accumulation; the latter can only be
allocated in that year&#39;s net profit.
(2) participation in distribution of preferred stock and preferred stock not participate
in the distribution:
The former refers to the company&#39;s profit increases, except share dividend,
but also can participate in the distribution of profits; the latter can not.
(3) non-redeemable preference shares and redeemable preference:
The former refers to the company the right to cancel the stock certificates at a
specified price; the latter can not.
(4) adjustable rate preferred stock and non-adjustable rate preferred stock:
The former is to protect the interests of shareholders, adjustable dividend; the latter
(5) non-convertible preferred stock and convertible preferred stock:
The former, under certain conditions can be converted into ordinary shares or
corporate bonds; the latter can not.
(C) of the current ownership structure in China
1, the state shares: the right to invest on behalf of state departments or institutions to
invest in the formation of state-owned assets to the company&#39;s shares. Two
cities in China are not currently state-owned share of total circulation 59% of the total
June 2001, the State Council promulgated the &quot;reduction of state-owned
shares to raise social security funds Interim Measures&quot;, but for the
reduction of basis points reduction programs, pricing principles, promoting speed,
mode of operation, post confirmation, decision-making, participation in the main,
implementation of environmental and so there is no clearly defined, causing panic the
stock market fell, while the stock market crash to issuing additional shares suspended,
state-owned shares issued by way of relying on stock holdings in fact, difficult to
implement. October 22, the Commission announced the suspension of state-owned
Shares Interim Measures. Until June 23, 2002 announced the cessation of state-owned
shares through the domestic securities market. State-owned shares reduction is
necessary, but still need to discuss reduction program.
Reduction of state-owned shares to raise social security funds Interim Measures
?The first is to improve the social security system, social security funds to develop
new funding sources to support the state-owned enterprise reform and development of
The term reduction of the second state-owned shares (including the state-owned
shares and legal person shares, the same below) is the point to the public and
securities investment funds and other investors in the transfer of public listed
companies (including listed companies to be the same below) the behavior of
Representatives of national unity under the State Council to exercise ownership of
The term unit of state-owned shareholder authorized representative is in accordance
with the state-owned assets &quot;of the state, classified management,
authorization management&quot; principle, by an authorized representative of
the national state-owned shares of listed companies held by the unit.
Article reduction of the funds raised by state-owned shares by the management of the
National Social Security Fund Council, the specific management measures shall be
formulated separately by the Ministry of Finance, the State Council for approval and
Article owned Shares issued mainly to take stock of the way state-owned shares.
Where the state owns shares of the Corporation (including companies listed overseas)
to public investors for the first time or issuing additional shares, the amount shall be
10% by financing the sale of state-owned shares; Co., Ltd. set up less than 3 years, to
be the sale of state-owned shares transfer by way of transfer from the National Social
Security Fund Council held by the commission when the company&#39;s public
offering in one or batches. Income from the sale of state-owned shares of stock, all
turned over to the National Social Security Fund.
Article VI of the principle of reducing state shares take market pricing.
Article reduction of state-owned shares by the Ministry of International Joint
Conference. Inter- ministry joint conference, convened by the Ministry of Finance,
State Development Planning Commission, the State Economic and Trade Commission,
Ministry of Labor and Social Security, China Securities Regulatory Commission, the
National Social Security Fund Council for the members of the unit, is responsible for
determining the financing of state-owned shares reduction programs and pricing
principles, research financing of state-owned Shares of other major issues involved.
Article VIII of the Inter-Ministerial Joint office in the Ministry of Finance to
undertake joint tasks.
Article decided to reduce the Inter-Ministerial Joint state-owned shares, the
shareholders authorized representative shall provide the following information:
(A) State-owned Shares Manual (Draft) and the underwriting agreement;
(B) units of state-owned shareholder authorized representative, the main underwriting
agency turned over a written promise reduction of income;
(C) of the Inter other materials provided.
Article X of the CSRC is responsible for reduction of state-owned shares of listed
companies and market supervision disclosure rules.
Article establishment of the National Social Security Fund and the establishment of
National Social Security Fund by the state-owned shares reducing capital and the
central financial budget, and other means of fund gathering. National Social Security
Fund Council&#39;s main duties are:
(A) management of funds obtained from reducing state shareholding, the central
government allocated funds and other funds raised in this way;
(B) According to the Ministry of Finance, Ministry of Labor and Social Security
jointly issued the directive and to determine ways to allocate funds;
(C) select and commission domestic and foreign professional investment management
organization with the fund to maintain and increase their value;
(D) to the public of the National Social Security Fund&#39;s assets, income,
financial position and cash flow.
(E) other matters entrusted by the State Council.
Article XII of the state-owned shares of stock issued revenue made by the main
agencies in the underwriting income of 2 days will be payable on income paid into the
Ministry of Finance is responsible for budget setting in specific subjects. Ministry of
Finance allocated within 5 days of the National Social Security Fund Council, and go
through and subtract the relevant unit of state-owned capital fund.
Article XIII entrusted with the fund&#39;s professional investment management
institutions must report regularly to the National Social Security Fund Council to
report on its operations and performance, by the National Social Security Fund
Council, disclosed to the community and accept their supervision.
Article XIV Inter-Ministerial Joint social security funds according to the needs and
development of the securities market, the stock of state-owned shares in issue at the
same time, select a small number of state-owned shares of listed companies, etc.
matching sale and buyback pilot. Pilot program and report to the State Council,
Ministry of International Joint Conference organized and implemented after approval.
After the implementation of Article XV of this approach, negotiated transfer
state-owned shares of listed companies, including non-sponsor-owned shares transfer
agreement, by the Ministry of Audit. Negotiated transfer of state-owned equity
holdings change occurs, the state-owned shareholder authorized representative unit
should purchase a certain percentage of income turned over to the National Social
Security Fund, the actual percentage and operational methods developed by the
Department of International Joint Conference and the State Council for approval and
implementation. Registration to the Ministry of Finance&#39;s approval
procedures for the transfer of ownership paperwork.
Units of state-owned shareholder authorized representative for state-owned shares of
listed companies issuing corporate bank loans and bonds, shall not exceed the total
amount of state-owned shares of listed companies, 50%, specific management
measures by the Ministry of Finance.
Article XVI of the measures implemented from the date of issuance. (State Council
June 12 release)
Case: Genius allowed additional
Will be the first reduction process in the issuance of additional shares of the
Day day (0836) 22, announced that the company issuing new shares in 2001 and the
state-owned shares are not issued more than 2,200 shares of stock of the current
distribution has been approved by the SFC and the Ministry of Finance. This will be
the &quot;reduction of state shares to raise social security funds Interim
Measures&quot; approved after the introduction of the first issuance and the
issuance of additional Shares during the program of state-owned companies.
According to previous announcement, the company originally planned to not more
than 20 million additional A shares, after the board of directors also adopted a
resolution reducing state shares in the issuing A shares in accordance with relevant
regulations when the additional financing of this amount by 10% of the
implementation of state-owned share reduction, use of market sale price reduction of
state-owned shares, and reduction of income turned over to the Social Security Fund.
(August 22, 2001, &quot;China Securities News&quot;)
2, legal person shares: corporate legal person or institution with legal personality and
social groups according to their disposable assets to invest in the formation of Limited
3, the public sector: social workers within an individual or joint-stock companies to
the formation of individual legal property investment company shares. Divided into
shares of the company employees, the public sector.
4, foreign shares: the stock company to raise funds to foreign investors, issued shares.
(1) domestic listed (B shares): to show that the face value of RMB to foreign currency
purchases, exclusively for foreign and Hong Kong, Macao and Taiwan investors to
(2) foreign market: shares of companies to raise foreign investors and overseas listed
shares. Mainly in the United States N-shares listed in Hong Kong- listed H shares and
listing in Singapore S shares.