As stock pledge is a high-risk business, once the market is faced with violent fluctuations, shareholders of listed companies are likely to face the risk of default, thus triggering a series of chain reactions.

Ge Shoujing said that on the whole, stock pledge is a double-edged sword. On the one hand, both tradable shares and restricted shares can provide liquidity for the development of shareholders and companies. When the stock price is in a stable state or even rising, the stock pledge will often sit back and relax. On the other hand, the essence of stock pledge is debt financing. In order to protect the interests of creditors, there will be a pledge rate and a liquidation line. When the stock price continues to fall, the value of collateral is also shrinking, especially after reaching the crisis line. If the major shareholder is unwilling or unable to cover the position, the stock pledge may lead to forced liquidation, which will undoubtedly bring two major risks: First, it will impact the stock price. Second, the pledge ratio is too high, and the controlling shareholder may lose control.