Sinonews Client Beijing, June 10 (Xie Yiguan) Facing the tighter US controls on Chinese companies and the embrace of the Hong Kong Stock Exchange, more and more Chinese stocks are starting to go home. After Alibaba returned to Hong Kong for listing last year, NetEase and JD.com have recently decided to go to Hong Kong for a second listing.
Chinese stocks are returning to Hong Kong for listing
Twenty years ago, NetEase rang the listing bell on the NASDAQ in the United States, becoming the first batch of domestic Internet companies to go public in the United States. In 20 years, Netease's share price has climbed from more than $2.63 on the first day to more than $400, and its market value now exceeds $50 billion. 20 years later, the bell of NetEase listing will ring on the Hong Kong Stock Exchange, becoming the second Chinese stock company to be listed in Hong Kong after Alibaba.
Screenshot of NetEase's IPO announcement.
Netease's prospectus disclosed on June 2 shows that NetEase issued 171.48 million common shares on the main board of the Hong Kong Stock Exchange. On June 7, NetEase's final selling price was determined to be HK$123.00 per share. Based on this calculation, Netease Hong Kong's listed fundraising scale was HK$21.092 billion. Subject to the approval of the Hong Kong Stock Exchange, the shares are expected to begin trading on the main board of the Hong Kong Stock Exchange under the stock code 9999 on June 11.
It is a little slower than NetEase. On June 8th, JD.com announced on the Hong Kong Stock Exchange that the public offering of 133 million shares in Hong Kong began at 9 am on the 8th. The highest public development price is HK$236 per share. The price is expected to be on June 11. It was formally traded on the Hong Kong Stock Exchange at 9 am on June 18, with the stock code 9618.
Not only NetEase, JD.com, Baidu, Pinduoduo, Good Future, New Oriental and other Chinese stocks have spread to Hong Kong for listing. On May 21, Li Yanhong, the founder of Baidu, said that we are indeed very concerned about the continued tightening of the control of the Chinese stock company in the United States, and we are also constantly discussing what can be done internally. These things include, of course, such as in Hong Kong 'S secondary listing.
And Duoduo Duo, Good Future, New Oriental denied the second listing in Hong Kong. A spokesperson for Pinduoduo said that the company's cash flow is healthy, and the fund reserves and income growth rate so far are enough to allow the "tens of billions of subsidies" to last for many years, so there is no secondary listing plan. In recent years, Pinduoduo has mixed up in the US stock market. As of the close of June 8, since the beginning of the year, Pinduoduo's stock price has increased by 94.29%. Its market value once exceeded Jingdong, twice that of Baidu, and was frequently overweighted by institutions.
According to the Haitong Securities Research Report, in addition to JD.com and NetEase, companies that currently meet the qualification for secondary listing in Hong Kong include Baidu, Haowei, 58 Tongcheng, Momo, Sina, Ctrip and other head companies.
On January 22 local time, the Chinese Consulate General in New York and the Nasdaq Group jointly organized a bell-ringing ceremony to celebrate the Chinese New Year at the Nasdaq Stock Exchange in New York. China News Agency reporter Liao Panshe
Why did NetEase and JD return to Hong Kong for listing?
The Netease disclosure document gives the answer: If the Foreign Company Accountability Act is passed by the US House of Representatives and signed by the US President, investors may be uncertain about the affected issuers (including NetEase), so NetEase’s The price of the American depositary receipt market may be adversely affected. If NetEase fails to meet the inspection requirements of the American Listed Company Accounting Supervision Committee imposed by the bill in time, it may be delisted from NASDAQ.
JD.com also mentioned this in its prospectus issued on June 8.
On May 20, local time in the United States, the US Senate passed the "Accountability Act for Foreign Companies." It stipulates that any foreign company's failure to comply with PCAOB (American Public Company Accounting Oversight Board) audit requirements for three consecutive years will prohibit the company's securities from being listed on the US stock exchange.
Although it still needs to pass through the House of Representatives and the US President’s signature and other processes from the implementation of the bill, Pan Xiangdong, chief economist of New Times Securities, told reporters from China News that starting from 2019, the U.S. restrictions on China’s shareholding restrictions will continue to increase. The Chinese stocks that have been discriminated against in the United States are struggling.
"The increasing US regulatory policy on China Prospective Shares has discriminated against China Prospective Shares. The accountability bill undoubtedly shows its attitude towards the strengthening of China Prospective Shares." Pan Xiangdong said, "In addition, Ruixing financial fraud will not only In addition to its own serious legal consequences, it also affects the reputation of China General Stock in the United States."
Since Ruixing Coffee exposed its financial fraud scandal on April 2, the Chinese stocks Zhonghao Future, iQiyi, and who to learn from have been attacked by short-selling agencies.
A few days ago, the "preferred place" for domestic technology companies to go public in the United States-the Nasdaq Exchange submitted a proposal to the SEC (United States Securities and Exchange Commission) to amend the listing rules. The proposal mainly includes three points: if there is any doubt about the audit quality of the company, it may be possible to adopt stricter listing standards for such companies; require that the listed company from the restricted market raise at least 25 million US dollars or the market value after listing One quarter; the management of companies in restricted markets must meet additional requirements such as relevant experience in listed companies in the United States.
"Enterprises can raise funds when they go back to Hong Kong. Compared with the "snapping" in the United States, stock prices fluctuate greatly, and returning to Hong Kong can also play a role in stabilizing stock prices." Chen Zunde, general manager of Guangdong Fande Investment Co., Ltd., told China News.com. In addition, there are Ali success stories in the front, in the case of capital pursuit, the stock price will have a short-term upward momentum.
On the morning of November 26, 2019, Alibaba-SW (9988.HK) was listed on the main board of the Hong Kong Stock Exchange. China News Agency reporter Zhang Weishe
The Hong Kong Stock Exchange opens the door for Chinese stocks
"This year will be an important year for the initial public offering (IPO), including a very large IPO from China, many of which we call companies returning from the United States." Li Xiaojia, chief executive of the Hong Kong Stock Exchange, said a few days ago.
Li Xiaojia indicated that many of the U.S. listed stocks that intend to list in Hong Kong already have the conditions for listing in Hong Kong, including technology companies. "At present, the atmosphere in the United States has become less friendly, and we have fundamentally reformed many aspects of the listing system to make us more flexible."
Before the IPO policy reform of the Hong Kong Stock Exchange, due to the restrictions imposed by the Hong Kong Stock Exchange on corporate governance and dual equity structure, many Chinese companies chose to go public in the United States. For example, Alibaba was listed on the NYSE on September 19, 2014.
In April 2018, the Hong Kong Stock Exchange revised its listing rules to clarify that it can retain the current VIE structure and different voting rights when going public in Hong Kong. On July 9, 2018, Xiaomi Group was listed on the Hong Kong Stock Exchange, making it the first company to be listed on the "equal shares with different rights" structure after the Hong Kong stock listing rules were revised. On September 20, 2018, Meituan Dianping became the second company with the same rights and different rights to be listed in Hong Kong after Xiaomi Group. On November 26, 2019, Alibaba returned to the Hong Kong Stock Exchange for secondary listing.
"The return of Chinese stocks will also optimize the structure of the Hong Kong stock industry and enhance the "new economy" company's right to speak in the Hong Kong stock market; Hong Kong stocks are the "valuation depression" of the global stock market. If more high-quality U.S. stocks return in the future, they will rise significantly The overall valuation of Hong Kong stocks; at the same time, it can also enhance the trading activity of Hong Kong stocks." GF Securities said.
Affected by the return of Chinese stocks and other factors, Hong Kong stocks continued to perform strongly in June, and the Hang Seng Index returned to 25,000 points, successfully achieving "Seven Lianyang".
Information figure: Stockholders in a securities business department are concerned about the market trend. China News Service reporter Zhang Langshe
Why not return to A shares?
Most Chinese stocks that returned around 2015, such as 360, Perfect World, Giant Network, Storm Technology, etc., chose to return to A shares. Why didn't the stocks in this round choose to return to A shares?
GF Securities analysis, on the one hand, the cost of privatization and delisting of China Prospective Shares, which has a complicated shareholding structure and a relatively high proportion of foreign shareholders, is high; A shares also face certain restrictions.
"VIE structure" is a model adopted by many companies to go public in the United States. It refers to the establishment of a wholly-owned subsidiary by a foreign listed entity in China. The wholly-owned subsidiary does not actually carry out its main business, but controls the domestic market through an agreement. The business and finance of the operating entity make the operating entity a variable interest entity of the listed entity. The same stocks with different rights mainly mean that enterprises can issue two types of stocks with different degrees of voting rights, so that the management can obtain more voting rights.
"Technology and emerging consumer companies enjoy a high valuation premium in Hong Kong stocks, which is very attractive for US and Chinese stocks. In addition, Hong Kong stocks are highly internationalized, with nearly half of the investors coming from overseas, and investors are mainly institutional, thus The investment style emphasizes long-term value." Haitong Securities Analysis. (Finish)