Multiple Beixin 50 Index Funds Double Net Value in Short Term; Time for a "Cool Down"?
The North Exchange market, which had been racing ahead, "cooled down" today.
On October 22nd, the North Index 50 closed down by 7.6%, experiencing significant fluctuations during the trading session, with many individual stocks experiencing severe volatility.
Since September 24th, the North Index 50 has seen a gain of 93%, leading the mainstream stock indices. Benefiting from the significant rise in the index, in just 15 trading days, the net value of many North Index 50 funds has doubled.
To protect the interests of investors, as of now, several public fund companies have announced in October that they will limit or suspend subscriptions for North Index 50 constituent index funds. At the same time, many companies have issued announcements for scale control.
In the view of many industry insiders, attention should be paid to the high valuation risks of the North Index 50, which has become "overheated" in the short term. At the same time, it is important to always pay attention to the impact of changes in policy and market sentiment on the North Exchange market.
After the sharp rise in funds, restrictions were imposed.
Since the North Index 50 constituent index fund rebounded on September 24th, it has driven many funds to rebound. From September 24th to October 21st, the funds with the leading net value increase in the entire market were dominated by North Index 50 constituent index funds. According to statistics, 4 North Index 50 constituent index funds had a net value increase of more than 100% during the period (calculated with shares merged, the same below), and 13 North Index 50 constituent index funds had a net value increase of more than 90%.
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The sharp rise in the North Index 50 constituent index funds has attracted many fervent funds to buy, and many public fund companies have found it difficult to cope, choosing to "close the door to customers".On October 8th, China Merchants Fund announced the suspension of subscription and conversion services for the China Merchants North Index 50 Fund to ensure the stable operation of the fund and protect the interests of fund shareholders.
On October 15th, China Merchants Fund announced the resumption of subscription and other services for the China Merchants North Index 50 Fund to meet investor demand, while setting a single-day single-account single-transaction subscription limit of 100,000 yuan. However, on October 22nd, the fund once again officially announced the suspension of subscription and other services for the same reasons.
Since October, several companies including Fullgoal, Southern, ICBC Credit Suisse, Bosera, Wanjia, and CEF have also officially announced restrictions on large subscriptions and other services for their North Index 50 funds. Among them, the minimum large subscription limit is 1,000 yuan, and the maximum is 100,000 yuan.
In addition, some fund companies have also issued announcements regarding the scale control of their North Index 50 funds. The current total share limit for several North Index 50 funds is 500 million shares, but fund companies have the right to adjust the share limit during the fund operation process.
A public offering industry insider told reporters that due to the rapid and large-scale changes in recent times, the company had to restrict subscriptions for the product to avoid risks.
"A large influx of new funds in the short term is a good thing, but it may also trigger a large-scale redemption and a stampede event in the future when the market fluctuates significantly," said Liu Yan, Chairman of Anjue Assets, to the reporter.
Liu Yan believes that the liquidity of the Beijing Stock Exchange market is relatively weak, and a rapid increase in fund scale may lead to a lack of sufficient counterparties to accept when a large number of stocks need to be sold, resulting in significant transaction risks. By restricting purchases or suspending subscriptions, fund companies can control the growth rate of the scale, thereby reducing potential redemption pressure, which is more conducive to the stable operation of the fund.
He also stated that changes in the policy and market environment may also affect the investment value of the North Index 50 funds, and fund companies need a certain buffer period to observe and assess the impact of these changes on fund investments.
The Beijing Stock Exchange market "cools down"
The North Index 50, which had been soaring, previously showed relatively weak liquidity compared to the main board, with lower trading volumes and weaker market performance. It had been dormant for a long time before the recent surge.Regarding the sudden surge in the Beijing Stock Exchange (BSE) market, a representative from Wanjia Fund indicated that the primary reason is "liquidity overflow," meaning funds from the Shanghai and Shenzhen stock exchanges have flowed into the BSE. Additionally, recent actions by the BSE against illegal share reductions, and statements by relevant departments at the Financial Street Forum, have conveyed more positive signals for deepening reforms in the BSE, further boosting the market's fervor.

The BSE 50 Index, at the start of the "924" market movement, reached its lowest point at 600.7 points and once peaked at 1279.22 points on October 21, doubling in just 15 trading days. Although it experienced a significant adjustment on October 22, the BSE 50 Index remains above 1150 points.
The market's massive fluctuations following the short-term record come with numerous risks. In response, Wanjia Fund believes that the BSE 50 has already reached a historical high in the short term, and with the current密集 disclosure period of third-quarter reports, against the backdrop of this year's weak economic recovery, the performance of small and medium-sized enterprises is likely to face pressure, and the short-term sector may experience fluctuations and repetitions.
The overheated BSE requires appropriate "cooling down." Liu Yan stated that an overheated market may lead to overvaluation of some companies. High valuations mean that investors need to bear higher risks, and future earnings growth may not necessarily support such high valuations, especially when market sentiment turns pessimistic or the market undergoes adjustments. Companies with high valuations may face significant pressure for valuation回调. At the same time, due to the smaller size of the BSE, market sentiment often plays a more critical role in the trading process.
Paipai Network's wealth financial planner Yao Xusheng believes that investors should pay attention to several risks behind the craze in the BSE market: First, the revenue scale and market value of the BSE 50 constituent stocks are relatively small. Although these companies have significant potential for growth, their risk resistance may be weaker. In the face of economic uncertainty, these companies may face significant challenges. Second, the liquidity of the BSE compared to the mainboard market needs to be improved. When market sentiment shifts, insufficient liquidity may lead to significant stock price fluctuations. Third, after a rapid increase, the valuation level of the BSE 50 Index is already not low, with a price-to-earnings ratio close to 50 times, at a historical high, and will face significant downward risks during market adjustments. Fourth, the BSE market is greatly influenced by policies, and changes in policies or market sentiment may impact the market.