What is share pledge? In fact, according to the explanation of Baidu encyclopedia, share pledge is a kind of right pledge, which means that the pledgee and the pledgor agree to set up a restrictive right of property on the shares held by the pledgor, and when the debtor fails to fulfill the debt at maturity, the creditor can buy the shares at a discounted price according to the agreement, or sell the shares and receive the priority of compensation. For example, when Shareholder A needs liquidity, he can pledge his shares to Institution B, which will then lend the money to Shareholder A. Shareholder A only needs to return the money to Institution B at maturity.

However, in order to prevent shareholder A from not paying back the money when it is due, Institution B will set a red line on shareholder A. If the share price falls below the warning line, A shareholders will need to pay back money or shares to Institution B. When the shares fall below the liquidation line, Institution B can sell the shares to offset the debt.

It is clear from here that in fact share pledges cannot be judged simply as good or bad, because share pledges are a common form of financing, and financing can sometimes be good or bad. However, it should be noted that if there is a sharp fluctuation in the market, then the share pledge is likely to face the risk of not being able to repay the principal. Under normal circumstances, share pledges can help the pledgor get the money it needs to operate, but if the pledge rate is too high, it can increase the company's financial risk.

It is worth mentioning that share pledges also have an impact on share prices, mainly in the following aspects:

Firstly, share pledges are generally good news, junk stocks, once the share pledges, often accompanied by a major reorganization, at least to raise expectations.

Secondly, the major shareholders for equity pledge is just a matter that must be disclosed by the relevant listed companies, and will not have any impact on the stock price, just a neutral news.

Third, the shareholders to hold the listed company's restricted shares to do the pledge, is for their own financing as a guarantee. The event itself alone will have little impact on the stock price.

Fourth, dare to do equity pledges of listed companies are for the corresponding investment direction is more confident, so for the holders of the party is there will be part of the institution to come in.

All in all, share pledge is just a neutral word, no good or bad.