Securities Daily: Do not blindly follow the trend and speculate on delisting risk stocks

On February 10th, the Shenzhen Stock Exchange issued a risk warning regarding the trading of *ST Cube stocks. However, on February 11th, after *ST Cube resumed trading, the stock continued to rise, with the daily increase exceeding 5%. In fact, since January 20th, *ST Cube’s stock price has risen by over 300% in total.

Against the backdrop of the company facing significant risks of mandatory delisting due to major violations and continuous regulatory warnings, the sharp rise in *ST Cube’s stock price is fundamentally disconnected from its underlying fundamentals, representing an irrational speculative frenzy detached from the company’s actual situation. The capital market operates on the principle that there are no free lunches; speculative trading that ignores delisting red lines and regulatory warnings will ultimately face appropriate punishment.

In recent years, with the deepening reform of the delisting system, the consensus in the market has shifted toward “delist where necessary.” Financial fraud severely damages the credibility of information disclosure systems, undermines market integrity and trading fairness, and major illegal violations leading to mandatory delisting are considered a “red line” that must not be crossed. Regulatory authorities have always taken a firm stance against such “problematic companies” and will依法清理。*ST Cube received a prior notice of administrative penalty and market ban from the Anhui Securities Regulatory Bureau in November last year, as the company is suspected of engaging in major illegal violations that could lead to mandatory delisting. Some investors involved in the delisting stock speculation may hold a “delisting might not happen” illusion, but in essence, it is a gamble on low-probability events, with risks and rewards completely mismatched. Most investors will only cut losses and exit.

In response to the abnormal speculation of *ST Cube, regulatory authorities have acted promptly. On January 20th, the Shenzhen Stock Exchange stated in a concern letter that the information released by the actual controller of *ST Cube, Gu Mou Tang, through illegal information disclosure channels, was suspected of being false, inaccurate, incomplete, and misleading, causing adverse market impact. The Shenzhen Stock Exchange has initiated disciplinary procedures against him. On January 23rd, the Anhui Securities Regulatory Bureau also announced that it would carry out regulatory actions according to law. On the evening of February 10th, the Shenzhen Stock Exchange reiterated that it has taken self-regulatory measures such as suspending trading for investors involved in abnormal trading behaviors to curb speculative frenzy with a “visible hand.” These actions are necessary to maintain normal trading order in the capital market and serve as early warnings and protections for investors.

Objectively speaking, the speculation in *ST Cube is driven by hot money and retail investors following trends, representing a short-term gamble and a continuation of the market’s “chasing gains and delisting” bad habits. To fundamentally curb such behaviors, purify the market environment, and promote healthy and stable development of the capital market, regulatory authorities need to adopt multiple measures and continue efforts.

First, further improve the abnormal trading monitoring system, fully utilize technological tools to accurately identify malicious speculation, stock price manipulation, and other abnormal trading behaviors, achieving “early detection, early warning, early disposal.” At the same time, increase efforts to investigate and punish related illegal activities, raise the costs of violations, and strengthen regulatory deterrence.

Second, optimize the implementation process of the delisting system. Although “delist where necessary” has become a market consensus, the *ST Cube incident reveals that the transmission of delisting risks still has a lag. From administrative penalty notices to formal sanctions, there is a certain cycle during which hot money can exploit the system to speculate on “pre-delisting market conditions,” preventing the warning and deterrent effects of the delisting system from fully manifesting. Future efforts should further optimize the delisting process, enhance the relevance and effectiveness of risk warnings, and ensure that the market truly respects the risks of delisting.

Third, normalize investor education, integrating delisting risk warnings, rational investing, and value investing concepts into daily regulatory work. Guide investors to establish correct investment concepts, improve risk awareness and prevention capabilities, and create a communication chain of “regulatory warning—risk cognition—rational decision-making,” helping investors avoid falling into “chasing gains and delisting” traps.

Historical experience repeatedly proves that speculation detached from fundamentals will ultimately fail. As the delisting mechanism becomes increasingly sound and regulatory efforts continue to intensify, investors should stay alert, avoid irrational speculation, and jointly safeguard the foundation for healthy development of the capital market.

(Source: Securities Daily)