Table of Contents
In the last two articles, we’ve introduced that Dealers are the investment department of a securities company. They use their own capital to invest in the stock market and cannot engage in credit transactions. Comparing Qualified Foreign Institutional Investor ( QFIIs ) and Investment Funds, Dealers have low capital levels and short operation cycles, and usually prefer more active stocks, such as popular stocks or theme stocks. Most of these stocks have small equity and have large fluctuations, and the probability of making profits is relatively high.
Calculation methods of Dealers’ shareholding ratio
✨Dealers’ shareholding ratio✨
The formula for Dealers’ shareholding ratio is as follows:
Individual stock: Dealers’ shareholdings / Outstanding shares
Industry: Dealers’ holding market value / Total market value outstanding
The problem that users often encounter is the calculation of the number of stocks held by the dealers. Here, we will take readers to use our TEJ Pro database to verify it. First, we can see that the algorithm for the number of stocks held by the dealers is as follows:
Estimate the number of treasury stocks and stocks bought and sold every day by the dealers. The number of treasury stocks before March 2008 is provided by TWSE. However, after March 2008, the TWSE ceases to provide monthly stock quantity. Therefore, we are currently using the weekly trading volume to estimate the number of treasury stocks at the end of the month. We will use financial statements for correction every six months.
It can be seen from the description that the number of stocks held by dealers is estimated from the monthly inventory and the net sell / buy of the dealers. Take TSMC ( 2330 ) as an example, From the figure below, we can see that on July 30, 2020, the number of stocks held by the dealers is 1,658, but on July 31, it becomes 0.
Users often have questions when they see the numbers. This is because at the end of the month, we will calibrate the number of stocks of Dealer Holding (Monthly)-ALL database. As shown in the figure below, it can be seen that on 2020/7, the number of stocks is 0.
Therefore, on 2020/7/31, the number of stocks held by dealers will be calibrated to 0, and starting from 8/1, the number of stocks will be calculated from 0 plus the daily change in net sell / buy.
As you can see from the figure above, on 8/3 there is a number of transactions 327, the number of dealers shareholdings will be 0+327 = 327.
Next is the part of the adjustment based on the financial report every six months. We can see that the number of stocks held by the dealers is 3,629 on June 29, 2020, and the number of stocks held by 6/30 should be 3629+503 = 4132, but the number is 5,643, as shown in the figure below:
Three Major Institutional Investors
This is because the number will be adjusted according to financial report every six month. The number will be 5,643.
Here is how to check the dealers’ shareholdings in the financial report. Take Yuanta Securities ( 000980 ) as an example, you can go to MOPS for inquiries. The steps are as follows:
1️⃣ Enter Yuanta securities code 000980 in the Quick search bar above.
2️⃣ Click on the searching result.
3️⃣ Click on the ‘Electronic Books’ button.
4️⃣ You can find the most recent quarterly financial statement
Since we are looking for the 2020 Q4 financial statement of Yuanta, which is now available in Chinese version MOPS only, we go on to demonstrate how to query on the Chinese surface.
1️⃣ Click basic information — Electronic books — Financial report.
2️⃣ Enter Yuanta securities code 000980 and year 109.
3️⃣ Click on the electronic file of the IFRS individual financial report for 2020Q2.
4️⃣ You can find that Yuanta have 1,021 shareholdings of TSMC.
Finally, we can add up the number of TSMC shareholdings by each dealer in 2020Q2, and we can get the number of 5,643. If you are interested, you can go to other securities firms to sum up the number of shares to verify.
Once we have the number of shares held by the dealers, we can calculate the shareholding ratio. The calculation method of shareholding ratio in 7/30 is 1658/25930380 = 0.01% and in 7/31 is 0/25930380 = 0%
In this article, we introduce the calculation method of dealers’ shareholding ratio. We have completely introduced the algorithms of the respective shareholding ratios of the three major institutional investors through these three articles. Investors can use these data to understand the changes in the stock market when doing chip analysis. We hope that every reader can have a deeper understanding through our articles.
