The risk of equity pledge is great. Once the shareholders can't repay the funds for redeeming the shares, or the value of the shares is lower than the agreed liquidation line of the closing price, investors can protect their own interests by selling the shares. This will cause the stock to plummet, leaving more investors who buy stocks at a loss.
Excessive reliance on equity pledge financing not only reflects the company's lack of capital, but also relies on equity pledge for financing; However, the excessive concentration of equity pledge will make the fluctuation of stock price more fragile, and the sharp drop of stock price will lead to forced liquidation and further tightening of capital chain.
If all the stocks are pledged and have touched the liquidation line, there are generally two situations:
First, most listed companies will stop raising funds to supplement the pledge and remove the pledge risk.
Second, some listed companies have no operating space and can only be forced to close their positions.
The fate of stocks with strong equity pledge is generally similar to: high position, high proportion pledge, stock price crash, high position, short position and stock price crash. The reason is simple:
The suspension or liquidation of equity pledge, on the one hand, puts great pressure on the pledged object; On the other hand, because stocks close to or below the liquidation line often choose to suspend trading, other institutional customer shareholders of the stock may sell other liquidity targets in response to redemption or net worth pressure, triggering a "chain reaction".
When investors invest, it is best to look at the pledge rate of this stock first. If the pledge rate is not high, the risk of liquidation will be much smaller, and investors need not worry too much. If the stocks on the market today have not been pledged, they are embarrassed to mix in the stock market. Therefore, investors should learn the stock risk analysis and try to reduce the price risk to a controllable range.