My Fintech Empire

A manager at the meeting looked around and analyzed: "The root cause of this problem is that funds are overly concentrated in a few large weight stocks, and I believe you all know the reason for this problem."

The manager paused for a moment, then spoke: "The reason is that small and medium-sized investors and retail investors in A-shares participate in the investment in the SGX market. They can only trade those on-site SGX 50ETFs or off-site SGX 50ETF linked funds. The reason for this phenomenon is that the high entry threshold of the SGX market blocks more than 90% of investors."

Everyone nodded, obviously agreeing with his view, even Fang Hong who attended the meeting admitted it, because this is the fact.

Just look at the daily trading volume of the six major SGX 50ETFs. The daily trading volume of each ETF is no less than 100 billion. This is simply a miracle. It may not be a big deal at first glance, but once you compare it, you will know how incredible it is.

During the same period, the daily turnover of the Shanghai and Shenzhen 300 ETF was only tens of billions or hundreds of billions, while the daily turnover of each of the six major SGX 50 ETFs in the SGX market was hundreds of billions.

This situation occurred because hundreds of millions of retail investors flocked to buy the SGX 50 ETF. Because they could not reach the entry threshold of the SGX market, retail investors could not buy individual stocks themselves. In addition, the returns of the SGX 50 Index far exceeded their expectations. Most retail investors were more willing to buy the SGX 50 ETF and hold a large position in the SGX 50 ETF. After all, the risk of trading individual stocks is greater, which also caused further concentration of funds.

In fact, retail investors can participate in the investment in the SGX market not only by buying the SGX 50 ETF, but also by many active hybrid public funds. In fact, there are also many varieties of public funds, including many active hybrid public funds, which are actually very rich and diverse, including those for mid-cap stocks, small-cap stocks, and those based on industry stock selection. For example, some public funds specialize in chip stocks, and some focus on growth stocks, etc.

In theory, this can divert a lot of funds.

However, retail investors are not interested in these public funds, especially those active hybrid public funds, because they find that these funds are too bad, and they can't even outperform the market, and the gap is not a little bit.

Why can't they outperform? Because they put garbage in.

Many fund managers manage active hybrid public funds, allocate a part of the stocks in the SGX market, and then put a lot of junk stocks in the two neighboring cities into the investment portfolio, specifically to take over at high prices.

The reason why the financial rentiers attached to the two neighboring cities have not been so noisy in recent years, and have not been crazy about the SGX market like a few years ago, is because they can indirectly suck blood from the SGX market in this way.

Many investors have information gaps and do not know the truth, so they are harvested in this way. They could have eaten big meat, but the meat was taken away without knowing it, and they can only eat some dregs, and even think it's okay.

However, stock investors know relatively more, and most stock investors will not buy those active hybrid public funds.

If these funds do not stuff junk stocks into them, they will certainly be able to divert a considerable part of the liquidity, and it will not be the case that everyone only recognizes the six major on-exchange New Certificate 50ETFs and their off-exchange New Certificate 50ETF connections.

At the end, one of the participants said: "To solve this problem, either launch new indexes and new ETFs, or lower the entry threshold, lowering the 1 million capital threshold to 100,000."

The current head of the SGX immediately spoke: "Lowering the threshold is definitely not a good idea. Once you lower the threshold, everyone will think that the market is about to peak and believe that you want big guys to come in and take over, which will have a serious negative effect on the market. This move is not advisable."

The stock market has developed for so many years that even retail investors have become smarter today. The main reason is that they have been deceived too many times before, and even a pig will subconsciously react to stress. In the final analysis, the credit has been seriously damaged by those financial rentiers, resulting in a sharp rise in the cost of trust.

If the entry threshold is announced to be lowered to 100,000 yuan, most stockholders will be able to buy stocks on their own. Everyone will definitely think that they are finally going to trick retail investors into taking over, and then they will conclude that the bull market has peaked. In the end, everyone will run away, and it will become an established fact, and the market will really experience a bull-bear transition.

At this time, Fang Hong said: "I don't agree with lowering the threshold either. Not to mention that it will cause panic, once the threshold is lowered, won't retail investors dominate the market again? Then should we go retail again?"

Fang Hong disagrees with lowering the threshold, and the current head of the SGX disagrees. Both of them have made their positions clear, so the other participants present naturally have no attitude, and they just need to follow the real actual decision-makers.

Another manager at the meeting said: "If the threshold is not lowered, then we can only launch new indexes and ETFs. We can't always rely on those public fund managers, right?"

When he mentioned the public fund managers, everyone present smiled, but the smile was full of sarcasm.

If it was expected, this meeting would not be held today. In fact, the SGX market has never invited people from any public fund to discuss a series of major reform issues.

Fang Hong smiled, spread his hands and said: "Then we can only promote new indexes and ETFs."

After a detailed discussion at the meeting, everyone finally confirmed the general direction and drafted a draft.

That is, the next reform focus of the SGX market is to launch three new indexes, namely the "SGX 500 Index", "SGX 1000 Index" and "New Town Securities Composite Index", referred to as the "SGX Composite Index". These three indexes have been confirmed at this meeting, but will not be launched at the same time.

The SGX Composite Index will include all stocks listed on the SGX market, and adopt the market capitalization weighting method, that is, the weighted proportion of each component stock in the total market capitalization is added up for calculation. Therefore, super large-cap stocks have a greater impact on the index, while small-cap stocks have a smaller impact on the index.

After the launch of the SGX Composite Index, it will become the real market index of the SGX market, and below it are the existing SGX 50 and the three major indexes that are about to be launched, namely the SGX 50 and SGX 1000.

The SGX 50 Index, which has already been launched, is composed of the 50 largest, most liquid and most representative stocks in the SGX market, and is a representative index of super large-cap stocks.

The SGX 500 Index includes the 51st to 550th largest stocks in the A-share SGX market, a total of 500 stocks, and is a representative index of mid- and large-cap stocks; the SGX 1000 Index includes the 501st to 1550th largest stocks in the A-share SGX market, a total of 1,000 stocks, and is a representative index of small-cap stocks.

…(End of this chapter)