Changchun Faway Automobile Components placed at Level 2 on Trading Risk Analytic, remains unchanged.

May 22, 2020 (China Knowledge) – Changchun Faway Automobile Components (stock code: 600742) is placed at Level 2 indicating a low trading risk level that is not likely to experience downward price swings.

Due to the coronavirus COVID-19 outbreak that has hampered China’s economy and financial market since Feb, we have re-adjusted and calibrated our trading-risk assessment criteria. This rating is a short term 1-month risk indicator weighed on market-relevant metrics. In addition to conventional techniques and trading analysis, it includes tracking of the company’s margin trading and stock lending activities, major shareholders’ shares sales and factors that could affect short-term price volatility. This rating does not constitute a long or short call of a company's shares.

Currently, the company’s free-float versus its outstanding shares ratio is 100.00%, with a total number of outstanding shares of 507,656,160.

The company has a total of 42,076,800 shares collateralized, which makes up 8.29% of its outstanding shares. The proportion of collateralized shares that are free-float and outstanding are 100.00% and 0.00% respectively.

‘Shares freeze’ refers to a compulsory measure taken by the People's Court of China by restricting equity owners to sell or transfer shares. Such action was taken by Court usually involves legal litigation on the defendant (shares owner) by plaintiff or prosecutor that owns the rights to the defendant’s properties (including shares). From the public records, more than 200 A-shares companies’ shareholders have had their shares frozen accumulating more than RMB 230 bln. As of May 15, 2020 the company has no shares that under Court's custody, and no shares that were pledged or mortgaged for financing purpose. Changchun Faway Automobile Components is given an "A" rating.

The sale or substantial short position by major shareholders is often seen as a negative sign by retail investors and fund managers. Whenever there is a major shareholder reduction of shares in a company the stock price would generally decline; and, sometimes, increase the concentration of large sell (short) orders. Hence, this could be a signal of large downward swings...