Analysis of the Effectiveness of Abnormal Volatility and Trading Suspension Verification Mechanisms for A-Share Small and Mid-Cap Stocks

Based on collected market data, company announcements, and regulatory information, I will provide you with a systematic analysis of abnormal volatility and the trading suspension verification mechanism for A-Share small and mid-cap stocks.

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Fenglong Co., Ltd. (002931.SZ) experienced one of the most extreme consecutive daily price limit-up rallies in the A-Share market in recent years between December 25, 2025, and January 13, 2026. Its specific performance is as follows:

Statistical Indicator	Data Performance
Consecutive Price Limit-Up Trading Days	12 trading days
Cumulative Increase in the Period	213.97%
Price-to-Earnings Ratio (TTM)	655.45x
Price-to-Book Ratio	17.19x
Average Daily Turnover Rate	Significantly above normal levels

From the company’s financial data, there were no major changes in its fundamentals in the first three quarters of 2025. The latest quarterly EPS was only $0.04, ROE was only 2.76%, and net profit margin was less than 5%, which stands in stark contrast to the stock price increase [0]. This is a typical reflection of price fluctuations driven by market sentiment rather than supported by fundamentals.

On the evening of January 13, 2026, Fenglong Co., Ltd. voluntarily issued a trading suspension verification announcement, whose key points include:

• The company’s main business has not changed, and daily operations are normal
• Clearly clarified that there are no restructuring plans with UBTECH, and there are no backdoor listing arrangements within the next 36 months
• Performance growth cannot support the current valuation level

• Risk of overheated market sentiment
• Risk of irrational speculation
• Risk of changes in the market competitive environment
• International trade risk
• Risk of substitution from the electrification transformation of garden machinery

The company warned that its latest price-to-book ratio is significantly higher than the industry average, and the stock price has obvious bubble characteristics.

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According to data disclosed by the Shenzhen Stock Exchange, between January 12 and 16, 2026, regulators adopted multi-level regulatory measures:

Type of Regulatory Measure	Quantity	Main Targeted Behaviors
Self-Regulatory Oversight Measures	387 cases	Abnormal transactions such as intraday price manipulation and false declarations
Major Matter Verification	15 cases	Verification of information disclosure and transactions of listed companies
Reporting of Suspected Illegal and Irregular Clues	5 cases	Cases involving suspected market manipulation, etc.
Disciplinary Actions	3 cases	Violations of information disclosure and standardized operation
Regulatory Letters	6 cases	Violations of information disclosure and standardized operation

The trading suspension verification mechanism has indeed produced an obvious “forced cooling” effect in the short term. Taking Fenglong Co., Ltd. as an example, the consecutive price limit-up trend was forcibly suspended during the trading suspension period, providing the market with a time window for information digestion and risk assessment.

However, the effectiveness of the mechanism has obvious limitations. Data shows:

• Guosheng Technology
  : Continued to hit price limit-ups after resumption of trading
• ST Chengchang
  : Continued to hit price limit-ups after resumption of trading, and the Shenzhen Stock Exchange had to take self-regulatory oversight measures to suspend investors’ trading
• China Satellite Communications Group
  : Still rose after risk warnings, and closed at the daily price limit-down on January 13

This phenomenon of “the more inspections, the more the price rises” shows that a single trading suspension verification is difficult to fundamentally curb speculative trading.

At the 2026 system work conference, the China Securities Regulatory Commission (CSRC) clearly emphasized “firmly preventing sharp fluctuations in the market” and adopted comprehensive measures:

• The Shanghai, Shenzhen, and Beijing Stock Exchanges simultaneously
  raised the margin ratio for margin trading to 100%
  to reduce leverage
• Multiple companies simultaneously issued risk warnings to guide public opinion
• Adopted
  trading suspension
  measures for abnormal trading accounts

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The market at the start of 2026 showed obvious structural characteristics:

Characteristic	Performance
Price Limit-Up Echelon	2 stocks with 7 consecutive price limit-ups, 5 stocks with 6 consecutive price limit-ups
Hot Concepts	Commercial aerospace, AI applications, brain-computer interfaces, GEO
Involved Sectors	ChiNext Board, STAR Market, Small and Medium Enterprise Board
Nature of Capital	Driven by high-leverage margin trading funds

Combined with the case of Fenglong Co., Ltd. and other cases in the same period, the systemic risks exposed by the abnormal volatility of small and mid-cap stocks include:

• Small floating share capital, large-scale trading can easily trigger sharp price fluctuations
• Relatively low participation of institutional investors, insufficient market pricing efficiency

• Traditional valuation indicators such as PE and PB are seriously distorted
• The “imagination premium” endowed by hot concepts lacks performance support

• Individual investors obtain information later than market main forces
• The cycle of theme speculation is short, and ordinary investors are easy to become “bag holders”

• ST Aowei has been locked in as the first stock delisted due to market capitalization in 2026
• A stock price below RMB 1 or a market capitalization below RMB 500 million for 20 consecutive days will trigger delisting

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Risk Level	Risk Type	Typical Performance	Response Strategy
Extremely High	Risk of Being Trapped by Chasing High Prices	Buying at high prices after consecutive price limit-ups	Avoid chasing price limit-ups
High	Risk of Margin Call	Consecutive price limit-downs after buying on margin	Reduce leverage ratio
High	Delisting Risk	ST/*ST, stock price below RMB 1	Stay away from problematic companies
Medium	Liquidity Risk	Unable to sell in a timely manner	Build positions in batches, diversify investments
Medium	Regulatory Risk	Account is suspended from trading	Standardize trading behaviors

1. Be Alert to the “Price Limit-Up Effect”
   • Consecutive price limit-ups are a warning signal of overheated market sentiment
   • Statistically, chasing high prices results in negative returns in the long term

2. Verify Fundamental Matching Degree
   • Whether the stock price increase matches the growth rate of revenue and profits
   • Whether PE/PB seriously deviates from the industry average

3. Pay Attention to Regulatory Signals
   • A company’s announcement of abnormal fluctuations = risk warning
   • Focus on exchange inquiry letters and regulatory letters

Recommended Item	Specific Operation
Position Management	No single stock accounts for more than 20% of the total position
Leverage Control	Margin trading ratio does not exceed 30%
Take-Profit and Stop-Loss	Set clear profit and loss target levels
Information Screening	Distinguish between facts and market rumors

Fu Yifu, a special researcher at Suzhou Commercial Bank, pointed out that investors should “view theme concepts rationally and focus on the core value of the company”. Against the background that current regulation emphasizes “stability first”, the market style is expected to shift from a “frenzied bull market” to a “long-term bull market”, and performance certainty will become the main source of excess returns.

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1. Trigger Threshold May Be Too Low
   : Abnormal volatility is triggered by consecutive price limit-ups, but there may be reasonable factors for price increases in the market
2. Limited Verification Depth
   : A 3-working-day verification period is difficult to complete a comprehensive investigation
3. Lack of Supporting Measures After Resumption of Trading
   : A single trading suspension is difficult to form continuous constraints

Optimization Direction	Specific Recommendations
Differentiated Regulation	Treat abnormal rises of high-quality stocks and speculation of poor-performance stocks differently
Investor Education	Strengthen the coverage and frequency of risk warnings
Trading Restrictions	Implement tiered restrictions on seriously abnormal accounts
Information Disclosure	Require companies to disclose the reasons for performance changes in more detail

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From the case of Fenglong Co., Ltd., it can be seen that a single trading suspension is difficult to reverse the formed speculative atmosphere, and it needs to be combined with comprehensive measures such as leverage regulation, investor education, and market monitoring to form a joint regulatory force.

For investors,

:

1. Respect the Market
   : Do not chase high prices after consecutive price limit-ups, and be alert to abnormal volume surges
2. Focus on Value
   : Stock prices may deviate from fundamentals in the short term, but will inevitably return to them in the long term
3. Risk Control
   : Set stop-loss levels, control positions, and stay away from leverage
4. Compliant Trading
   : Avoid abnormal trading behaviors to prevent account regulation

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[0] Jinling AI Financial Database - Fenglong Co., Ltd. (002931.SZ) Company Profile, Stock Price Data, Financial Analysis
[1] Beijing News - “First Seven Days of A-Shares: From "Consecutive Price Limit-Up" Frenzy to Trading Suspension Self-Inspection, Who is "Speculating Hot" and Who is "Cooling Down"?” (https://m.bjnews.com.cn/detail/1768314123129734.html)
[2] Sina Finance - “AI Blue-Chip Stock, Trading Suspension Verification! Multiple A-Shares, Urgent Risk Warnings!” (https://finance.sina.com.cn/roll/2026-01-15/doc-inhhiusf6551824.shtml)
[3] Securities Times - “Yidian Tianxia: Will Verify Stock Trading Fluctuations, Trading Suspension from the 15th” (https://www.stcn.com/article/detail/3593498.html)
[4] Eastmoney - “Shenzhen Stock Exchange: Took Self-Regulatory Oversight Measures for 387 Abnormal Securities Trading Behaviors This Week” (https://finance.eastmoney.com/a/202601163622098514.html)
[5] CNR Online - “Shenzhen Stock Exchange: Took Self-Regulatory Oversight Measures for 387 Abnormal Securities Trading Behaviors This Week” (https://finance.cnr.cn/ycbd/20260117/t20260117_527496485.shtml)
[6] Shanghai Stock Exchange - “China Securities Regulatory Commission Holds 2026 System Work Conference” (https://www.sse.com.cn/home/component/news/c/c_20260116_10805368.shtml)
[7] Xinhua Finance - “CNR Financial Review | Adhere to Stability First, A-Shares Need a "Long-Term Bull Market" Not a "Frenzied Bull Market"” (https://www.xincai.com/article/nhhqxtv4612371)
[8] Sohu - “New Trend of A-Shares! Regulators Take Frequent Actions, and the Number of Companies Prompting Trading Risks is Increasing” (https://m.sohu.com/a/978070862_121118712)