Securities Daily: Do not blindly follow the trend and speculate on delisting risk stocks

On February 10th, the Shenzhen Stock Exchange issued a risk warning regarding the trading of *ST Cube shares. However, on February 11th, after *ST Cube resumed trading, the stock continued to rise, with a daily increase of over 5%. In fact, since January 20th, *ST Cube’s stock price has increased by more than 300% in total.

Against the backdrop of the company facing significant risks of mandatory delisting due to major violations and regulatory warnings, the sharp rise in *ST Cube’s stock price is fundamentally disconnected from its underlying fundamentals, representing an irrational speculative frenzy detached from the company’s actual situation. The capital market offers no free lunches; speculative trading that ignores delisting red lines and regulatory warnings will ultimately face deserved punishment.

In recent years, with the deepening reform of the delisting system, “de-list if necessary” has become a market consensus. Financial fraud severely damages the credibility of information disclosure systems, undermines market integrity and trading fairness, and major illegal violations leading to mandatory delisting are considered a “red line” that must not be crossed. Regulatory authorities have always taken a firm stance against such “problem companies” and will依法清理。*ST Cube received a “Pre-Notification of Administrative Penalty and Market Ban” from the Anhui Securities Regulatory Bureau last November, indicating suspected violations that could trigger mandatory delisting. Some investors involved in the hype around delisted stocks may hold a “delisting might not happen” hope, but this is essentially betting on a low-probability event, with risks and rewards completely mismatched. Most will simply cut losses and exit.

In response to the abnormal speculation of *ST Cube, regulators have acted promptly. On January 20th, the Shenzhen Stock Exchange stated in a concern letter that the information released by the actual controller, Mr. Gu, through illegal information disclosure channels, was suspected of being false, inaccurate, incomplete, and misleading, causing adverse market impact. The Shenzhen Stock Exchange has initiated disciplinary procedures against him. On January 23rd, the Anhui Securities Regulatory Bureau also announced it would carry out regulatory actions according to law. On the evening of February 10th, the Shenzhen Stock Exchange reiterated that it had taken self-regulatory measures such as suspending trading for investors involved in abnormal trading behaviors to curb speculative frenzy. These actions are necessary to maintain normal trading order in the capital market and serve as early warnings and protections for investors.

Objectively, the hype around *ST Cube is driven by short-term speculation led by hot money and retail investors following the trend, continuing the market’s bad habits of “speculating on delisting” and “playing the difference.” To fundamentally curb such behaviors, purify the market environment, and promote healthy and stable development of the capital market, regulators need to adopt multiple measures and continue efforts.

First, further improve the abnormal trading monitoring system, fully utilize technological tools to accurately identify malicious speculation and stock price manipulation, achieve “early detection, early warning, early disposal,” and increase the penalties for related illegal activities to raise costs and strengthen regulatory deterrence.

Second, optimize the delisting process. Although “de-list if necessary” has become a market consensus, the *ST Cube incident reveals that the transmission of delisting risks still has a lag. From administrative penalty notices to formal sanctions, there is a certain cycle during which hot money can exploit the system to speculate on “pre-delisting market conditions,” preventing the warning and deterrent effects of the delisting system from fully manifesting. Future efforts should further streamline the delisting procedures, enhance the relevance and effectiveness of risk warnings, and ensure the market truly respects delisting risks.

Third, normalize investor education, integrating delisting risk warnings, rational investing, and value investing concepts into daily regulatory work. Guide investors to establish correct investment concepts, improve their risk awareness and capabilities, and create a communication chain of “regulatory warning—risk awareness—rational decision-making,” helping investors avoid falling into “speculating on difference or delisting” traps.

Historical experience repeatedly proves that speculation detached from fundamentals will ultimately fail. As the delisting mechanism becomes more sound and regulatory efforts intensify, investors should stay alert, avoid irrational speculation, and jointly safeguard the foundation of healthy capital market development.

(Source: Securities Daily)