Core Insights - On October 9, the first trading day after the National Day holiday, SMIC (688981) faced a significant drop in its margin financing ratio from 0.7 to 0 due to its static P/E ratio reaching the 300 times threshold, alongside other high-valuation stocks like Baiwei Storage (308.97 times) and Luqiao Information (947.11 times) [5][25] - This adjustment is not a temporary policy or specific to SMIC, but rather a routine operation by brokerages based on rules implemented by the Shanghai and Shenzhen Stock Exchanges since 2016, which mandates that stocks with a static P/E ratio exceeding 300 or negative must have their financing ratio set to zero [5][25] Group 1: Key Concepts - Static P/E Ratio: This is a valuation metric calculated as the stock's closing price divided by the earnings per share from the most recent audited fiscal year. A static P/E ratio of 300 means that if future earnings remain constant, it would take 300 years for investors to recoup their investment [8] - Financing Ratio: This refers to the "collateral discount" applied by brokerages when investors use stocks as collateral for margin financing. A financing ratio of 0 means the stock can no longer be used as collateral for borrowing [10] Group 2: Current A-Share High P/E Club Overview - As of October 9, there are 282 stocks in the market with a static P/E ratio exceeding 300, with some, like Yian Technology, surpassing 10,000 times [15] - There are 22 stocks in the 280-300 P/E range, which are considered "critical stocks" that investors should monitor closely, as price increases or profit declines could easily push them over the 300 times threshold [16] Group 3: Market Reactions to Financing Ratio Adjustments - The adjustment of financing ratios is a standard market operation, and investors should not panic excessively. The reduction in financing ratio directly impacts the available margin for investors holding these stocks, leading to a decrease in their usable margin [21] - The adjustment does not equate to the removal of the stock from margin financing eligibility. Investors may still be able to finance purchases of the stock if they meet other brokerage requirements, although the reduction in available margin may limit new financing opportunities [22] - The adjustment does not automatically trigger margin calls unless the overall collateral ratio falls below the maintenance threshold, which is typically set at 130% [23]

Core Viewpoint - The article discusses the recent adjustments in the margin financing and securities lending rates for various high-valuation technology stocks, highlighting the volatility in the market and the implications for investors [1][2]. Group 1: Margin Financing Adjustments - On October 10, 2023, Shenwan Hongyuan Securities announced adjustments to the margin financing and securities lending rates, effective from October 13, 2023 [3]. - Several stocks, including XianDao Intelligent, Nanji Guang, and Zhongxin International, saw their margin financing rates adjusted from 0% to rates ranging from 30% to 70% [1][4]. - Notably, Zhongxin International and Haiguang Information's rates were increased to 70%, while Huaxin Yongdao's rate was set at 30% [4][5]. Group 2: Impact of High Valuation - A number of stocks, including Zhongxin International and Baiwei Storage, had their financing rates set to 0% due to their static price-to-earnings (P/E) ratios exceeding 300, indicating a significant valuation concern [7][9]. - As of September 30, 2023, nine stocks, including Zhongxin International and Luqiao Information, were reported to have P/E ratios above 300, with Luqiao Information reaching a staggering 947 [7][9]. - Following the market adjustments on October 10, some stocks fell below the 300 P/E threshold, with Haiguang Information at 290.68 and Zhongxin International at 246.747 [10]. Group 3: Investor Implications - The adjustments in margin financing rates will directly reduce the leverage available to investors using these stocks as collateral, potentially leading to a need for additional margin or debt reduction [8]. - Investors holding significant amounts of these stocks may face pressure due to changes in their available margin balance [8].

Core Viewpoint - The adjustment of margin trading collateral rates for SMIC and BAWI Storage is seen as a positive development after significant declines in their stock prices, with rates increased to 70% and 50% respectively [2][4]. Group 1: Margin Trading Adjustments - SMIC's margin trading collateral rate has been raised from 0% to 70% [4][6]. - BAWI Storage's margin trading collateral rate has been increased from 0% to 50% [4][6]. - Other stocks such as XianDao Intelligent, Nanji Light, and Manens-T have also seen their collateral rates adjusted upwards to between 30% and 65% [4][6]. Group 2: Market Reactions - The previous announcement of a 0% collateral rate led to significant declines in stock prices, with SMIC and BAWI Storage experiencing maximum drawdowns of over 18% and 17% respectively [4][6]. - Some securities firms, including CITIC Securities and Everbright Securities, still maintain a 0% collateral rate for SMIC and BAWI Storage as of the report date [8][9]. Group 3: Reasons for Collateral Rate Adjustments - Collateral rates can be adjusted to 0% if a stock's static price-to-earnings ratio exceeds 300 or is negative, indicating a significant deviation from fundamentals [10]. - Stocks under risk warnings or in delisting processes also have their collateral rates set to 0% to protect investors [10]. - Brokerages may dynamically adjust collateral rates based on their risk management requirements, particularly during periods of unusual volatility [10].

Core Viewpoint - The announcement from Shenwan Hongyuan Securities and Shenwan Hongyuan West Securities regarding adjustments to margin securities and their corresponding rates indicates a significant shift in the financing landscape for certain stocks, reflecting dynamic risk management measures by brokers [1][3]. Summary by Category Margin Securities Adjustments - From October 13, several stocks including XianDao Intelligent, NanjiGuang, Manenseter, and others will see their margin securities rates adjusted from 0% to a range of 30% to 70% [1]. - Conversely, stocks such as Tongyu Heavy Industry and Chuangyitong will have their rates reduced from 65% to 0% [1]. Static Price-Earnings Ratios - Following recent declines, the static price-earnings ratios (PE) for XianDao Intelligent, NanjiGuang, and others have decreased, with current ratios being 276.75, 279.33, and 299.93 respectively [4]. - The adjustment of margin rates for these stocks occurred after their PE ratios fell below 300, while Tongyu Heavy Industry and Chuangyitong, which saw increases in their PE ratios above 300, had their rates set to 0% [4][5]. Market Performance - In the past two trading days, XianDao Intelligent, NanjiGuang, and others experienced significant declines of 14.69%, 7.48%, and 11.94% respectively [4]. - The recent performance of these stocks has influenced their static PE ratios, leading to the adjustments in margin rates by the securities firms [4].

Core Points - The announcement from Shenwan Hongyuan Securities and Shenwan Hongyuan West Securities regarding adjustments to margin securities and their corresponding ratios will take effect on October 13 [1] - Several stocks, including XianDao Intelligent, NanjiGuang, ManensTer, and others, have seen their margin securities ratios increased from 0% to between 30% and 70% [1][4] - Conversely, Tongyu Heavy Industry and Chuangyitong's margin ratios have been reduced from 65% to 0% following their recent performance [1][4] Summary by Category Margin Securities Adjustments - Stocks such as XianDao Intelligent, NanjiGuang, ManensTer, and others have had their margin ratios adjusted upwards, with specific ratios set at 30% to 70% [1][4] - The margin ratios for Tongyu Heavy Industry and Chuangyitong have been adjusted downwards to 0% due to their static P/E ratios exceeding 300 [1][4] Performance Metrics - Recent trading days have seen significant declines in the stock prices of XianDao Intelligent (down 11.94%), NanjiGuang (down 8.32%), and ManensTer (down 4.31%) [4][5] - As of October 10, the static P/E ratios for XianDao Intelligent, NanjiGuang, and ManensTer were reported at 299.93, 291.44, and 289.43 respectively, indicating a downward trend [4][5] Regulatory Context - The adjustments in margin ratios are part of dynamic risk control measures implemented by brokerages, in accordance with the revised financing and securities trading regulations [4]

Core Viewpoint - A total of 9 A-share stocks have had their financing and securities lending collateral ratios adjusted to zero due to high static price-to-earnings (PE) ratios, indicating a significant tightening in leverage for these stocks [1][5]. Financing and Securities Lending Adjustments - The financing and securities lending collateral ratio for Zhongxin International (688981.SH) was adjusted from 0.7 to 0, and for Baiwei Storage (688525.SH) from 0.5 to 0 [1]. - Other stocks affected include Ruisheng Intelligent (688215.SH), Manster (301325.SZ), Yongding Co. (600105.SH), and others, with their collateral ratios also set to zero by multiple brokerages [1][4]. Static PE Ratios - The static PE ratios for the affected stocks are notably high, with several exceeding 300, which is the threshold for collateral ratio adjustments to zero [4][5]. - For instance, Yongding Co. had a static PE ratio of 302.5663, while Zhongxin International had a ratio of 303.0659 [4]. Market Impact - The adjustment of collateral ratios to zero means that these stocks can no longer be used as collateral for margin trading, potentially impacting trading strategies for investors [6]. - Despite the adjustments, existing positions for investors are not immediately affected, but new positions cannot be opened until the collateral ratios are revised [6]. Market Activity - The margin trading market remains active, with a balance consistently above 2.2 trillion yuan since September, indicating strong investor interest [6][7]. - Recent trading activity has shown a preference for sectors such as non-ferrous metals and home appliances, while sectors like electronics and pharmaceuticals have seen net selling [7].

Core Viewpoint - The adjustment of the financing and securities lending ratio for SMIC and other stocks to zero is a regulatory measure based on specific criteria, including high static P/E ratios and risk warnings [1][2][3]. Group 1: Stock Adjustments - Starting from October 9, the financing and securities lending ratio for SMIC was adjusted from 0.70 to 0, a trend observed across multiple brokerage firms [1]. - Other stocks, such as BAWI Storage, also had their financing ratios adjusted to zero, indicating a broader regulatory action affecting several stocks [1]. - The adjustment to zero is typically applied to stocks with a static P/E ratio exceeding 300, stocks under risk warning (ST or *ST), or those with a net asset value per share below 1 yuan [2][3]. Group 2: Regulatory Framework - The adjustments are in accordance with regulations set by the stock exchanges, which specify that stocks under risk warning or with a static P/E ratio above 300 should have a financing ratio of 0% [3]. - The recent increase in stock prices for certain companies, including SMIC, has led to static P/E ratios exceeding 300, prompting these adjustments [3]. - As of October 9, over 200 stocks in the A-share market had static P/E ratios above 300, with SMIC's latest static P/E ratio reported at approximately 302 [3].

Core Viewpoint - The adjustment of the collateral ratio for stocks like SMIC to zero is a routine measure based on regulatory guidelines, reflecting the company's high static P/E ratio and risk warnings [1][2]. Group 1: Stock Collateral Ratio Adjustments - Several brokerage firms have adjusted the collateral ratio for SMIC and other stocks to zero, effective from October 9, indicating a broader trend beyond just SMIC [1]. - The collateral ratio for SMIC and other stocks was previously set at 0.60 before being adjusted to 0, highlighting significant changes in market conditions [1]. Group 2: Regulatory Framework - The Shanghai and Shenzhen Stock Exchanges have established clear rules that lead to a collateral ratio of zero for stocks that are under risk warning, have a static P/E ratio exceeding 300, or are in a delisting preparation period [2]. - The static P/E ratio is calculated as the stock's closing price divided by the company's audited basic earnings per share from the most recent fiscal year, with over 200 A-share stocks currently exceeding a static P/E ratio of 300, including SMIC [2].

Core Viewpoint - The adjustment of the collateral ratio for stocks like SMIC to zero reflects regulatory compliance and market conditions, particularly due to high static P/E ratios exceeding 300 times [2][3][4]. Group 1: Stock Adjustments - Starting from October 9, the collateral ratio for SMIC was adjusted from 0.60 to 0, a trend observed across multiple brokerage firms [2]. - Other stocks, such as BAWI Storage, also had their collateral ratios adjusted to zero, indicating a broader market trend [2]. - The adjustment is part of routine practices by brokerages based on trading regulations [3]. Group 2: Regulatory Framework - Brokerages adjust collateral ratios according to exchange regulations, particularly for stocks with static P/E ratios over 300, stocks under risk warning, or those with net assets below 1 yuan [3][4]. - The Shanghai and Shenzhen Stock Exchanges have clear rules stating that stocks under risk warning or with high static P/E ratios must have a collateral ratio of zero [4]. Group 3: Market Conditions - The recent surge in SMIC's stock price led to a static P/E ratio of approximately 302 times, contributing to the collateral ratio adjustment [4]. - As of October 9, over 200 stocks in the A-share market had static P/E ratios exceeding 300 times, indicating a potential market-wide issue [4].

Core Viewpoint - Semiconductor Manufacturing International Corporation (SMIC) has faced a sudden situation where its A-share margin financing ratio has been adjusted to zero by major brokerages due to its static price-to-earnings (P/E) ratio exceeding 300 times, as per the revised rules of the Shanghai and Shenzhen Stock Exchanges [1][2] Group 1: Impact on SMIC - As of September 30, SMIC's static P/E ratio was just over 300, leading to the adjustment of its A-share margin financing ratio to zero by brokerages like CITIC Securities and Guotai Junan [1][2] - Prior to this adjustment, SMIC's A-share margin financing ratio was 70% at Guotai Junan [1] - Other stocks, such as Bawei Storage, also had their margin financing ratios adjusted to zero due to similar P/E ratio conditions [2] Group 2: Market Regulations - The Shanghai Stock Exchange's revised margin financing rules state that A-shares with a static P/E ratio above 300 or negative values will have a margin financing ratio of 0% [2] - The static P/E ratio is calculated based on the stock's closing price and the audited earnings per share from the most recent fiscal year [2] Group 3: Investor Implications - Investors holding stocks with a margin financing ratio reduced to zero may need to provide additional collateral or liquidate some assets to continue financing [3] - Existing positions are generally not forced to be liquidated, but new positions cannot be opened until the margin financing ratio changes [3] Group 4: Comparison with Hong Kong Market - The Hong Kong market has a more flexible approach, allowing brokerages to set their own margin financing ratios without strict rules on high P/E ratios or losses [4][5] - SMIC's Hong Kong shares currently have a margin financing ratio of around 50%, despite its static P/E ratio being 175 times [5] - Other stocks with high P/E ratios in the Hong Kong market, such as Hua Hong Semiconductor, can still be used as collateral for financing [5]