In the vast landscape of the Chinese stock market, recent trends have showcased a heightened interest in what is known as "market capitalization management," particularly concerning stocks tied to central state-owned enterprises, often referred to by their initials, "Zhongzi-tou." These companies, including giants like China National Petroleum Corporation, China Petroleum & Chemical Corporation, China Unicom, and China Coal Energy, have experienced significant appreciation in their stock prices, igniting conversations around the underlying dynamics of these movements. The excitement, however, has been met with a degree of unease, as public discourse questions the sustainability and authenticity of such market fluctuations.

Market capitalization management is not merely about elevating stock prices for the sake of aesthetics; it encompasses a multifaceted approach that requires time, patience, and adherence to established principles and regulations. Successfully addressing the intricacies of market capitalization management necessitates the cooperation and understanding of various stakeholders. It’s crucial for corporate leaders, especially within state-owned enterprises, to align their incentives with the genuine performance of their companies. However, caution is warranted, as the temptation for a minority of key decision-makers to engage in unethical practices—such as inflating performance figures or manipulating stock prices under the guise of market capitalization management—remains present.

At its core, market capitalization management undeniably involves stock price oversight, an irrefutable truth. The relationship is straightforward: the market capitalization of a listed company is determined by multiplying its total share capital by the current stock price. Therefore, when the total number of outstanding shares remains stable, market capitalization management effectively becomes synonymous with stock price management. This is a reality that should not be obscured, for it lies at the heart of financial common sense.

Nonetheless, it is crucial to draw distinctions between different facets of market capitalization management. In its broader sense, the concept also relates closely to the total share capital of a public company. Hence, if a company’s stock price stays constant, an increase in total share capital through avenues such as refinancing can also amplify its market capitalization. Practices like directed share placements serve as quick routes for firms aiming to boost their market capitalization. Such strategies may extend beyond conventional discussions on market capitalization management, which tend to focus more narrowly on fostering investor confidence rather than extracting maximum gains from investors.

The discourse surrounding market capitalization management typically aligns itself with a narrower interpretation, emphasizing stock price management without resorting to methods of further capital raising. This means that, with a stable number of shares in circulation, effective management shifts focus onto the dynamics of stock pricing. The narrative espoused by the State-Owned Assets Supervision and Administration Commission (SASAC) reinforces this notion, advocating for a market-centric approach involving stock repurchases and other mechanisms that enhance investor trust and stabilize market expectations. In this light, it becomes increasingly clear that what SASAC describes as market capitalization management falls within the domain of stock price oversight.

How stock prices are managed calls for careful consideration. Techniques like financial falsification or stock manipulation fall under the category of pseudo-market capitalization management, and rigorous measures must be taken to combat these tendencies. Stock speculation, on the other hand, constitutes a market-driven phenomenon that cannot be directly controlled by individual companies. To effectively manage their market capitalization, firms are encouraged to focus on genuine performance improvements; strong financial results naturally lead to growing stock prices. From a market-driven perspective, concrete steps toward market capitalization management usually encompass avenues such as share buybacks, increased holdings by major shareholders, cash dividends, and stock splits. Among these activities, the impact of share buybacks becomes especially pronounced when structured as a cancellation of shares, rather than as mechanisms linked to employee incentive programs or stock plans, which may yield limited efficacy.

When it comes to stock price management, several critical price points merit attention. Firstly, any strategy should adhere to the guidelines of the company’s stock repurchase regulations. Key prices to monitor include the latest per-share net asset value, consistently tallied over the preceding twenty trading days, a cumulative decline of twenty percent in industry stock prices, as well as instances where stock prices drop below fifty percent of the highest closing figure recorded in the past year. Furthermore, the price set during new stock issuance and prices from the latest financing rounds should also be carefully evaluated.

In instances where a company’s stock price slips below these established thresholds, that company bears the responsibility to activate its market capitalization management protocol. Such actions serve the dual purpose of uplifting their stock price while safeguarding investors' rights. Importantly, market capitalization management isn't the exclusive purview of central or state-owned enterprises. Every public company holds an inherent obligation to engage in market capitalization management activities. For companies that neglect this responsibility, it may be appropriate to limit the exercise of rights held by the company and its principal shareholders.