Due to the unique profit threshold of A-share IPOs, some Chinese companies of Internet and biomedicine have to seek overseas listings due to financing needs. Flexible market mechanisms in overseas markets and investment groups based on institutional investors Will stimulate Chinese companies to develop and maintain fundamentals more.
However, just as the situation is currently being encountered, the strict conviction and supervision system in the overseas market, and the complete long and short mechanism, the strong awareness of rights protection of investors also makes many Chinese companies face great after listing. Development pressure. The dream of Chinese companies' overseas IPOs, the crisis coexist, and they will go out, or they will fly to the sky, or they will die.
The difficulties encountered by many companies and a number of Chinese stocks in the United States have, to a certain extent, reflected that the biggest difficulty for Chinese companies to list overseas is not the listing itself, but a series of changes that may occur after the listing. 'pain'.
A series of encounters after the listing of US stocks (PDD.O) is becoming a mirror for Chinese companies to develop after they land in overseas markets.
US time on August 6th, the share price rose 5.72% to 20.16 US dollars / share, once again exceeded the issue price of 19 US dollars / share, compared to the past few trading days to change the trend.
Since the successful listing on the NASDAQ exchange on July 26, in addition to the 40% increase in the first trading day, the stock price has been plunged into a double vortex due to public opinion and supervision. Being questioned by the outside world for selling 'fake goods', the fight was much more than just interviewed by the relevant state departments, and it was therefore a class action lawsuit in several law firms in the United States.
This scene seems to be similar. Alibaba (BABA.N), which landed on the New York Stock Exchange in September 2014, was also questioned by the parties because of the 'fake goods' problem, and was also subject to class action by American law firms.
The 21st Century Capital Institute believes that due to the unique profit threshold of A-share IPOs, some Chinese companies of Internet and biomedicine have to seek overseas listings due to financing needs. The flexible market mechanism and institutions in overseas markets Investor-based investment groups will stimulate Chinese companies to develop and maintain fundamentals.
However, just as the situation is currently being encountered, the strict conviction and supervision system in the overseas market, and the complete long and short mechanism, the strong awareness of rights protection of investors also makes many Chinese companies face great after listing. Development pressure.
However, some changes are also taking place. In order to attract outstanding companies to list in China, the A-share listing system is undergoing some changes, and the release of China Depositary Receipt (CDR) may change this situation very well.
Fighting a lot of 'trouble'
In the three years since its establishment, the number of users has exceeded 300 million, and the US stocks have been successfully listed. With the listing on Nasdaq on July 26, the company and its founder Huang Wei had no chance in the capital market.
However, as the 'blessings of the blessings', many changes have been quietly happening behind the successful listing. The attention paid by the outside world has also changed from the extraordinary experience of its propaganda to its platform. The sale of goods in the 'fake goods', 'cottage' question.
Although Huang Hao has repeatedly stood up for explanation and clarification, the raging public opinion still drowns it and the market. The voice of market doubts is also transmitted to the secondary market. After the 40.53% increase on the first day of listing, A lot of stock prices followed the 'Waterloo'.
On the next day and the third trading day, the share price of the company fell 7.87% and 8.54% respectively. By August 1, it fell below the issue price of US$19/share for the first time. The stock price came to the lowest at 18.62 USD/share. .
The reason why the stock price hit the lowest point is the follow-up of the domestic regulatory authorities. Among them, the State Administration of Markets and Administration has asked the Shanghai Municipal Administration of Industry and Commerce to make a lot of talks, and to carry out issues such as the cottage products and brand names reflected by the media and consumers. Investigations, as long as they constitute illegal, will be dealt with seriously.
At the same time, due to the above-mentioned problems, the United States market is considered to be missing in the letter of the United States, and has been subjected to class actions by various law firms in the United States, including Rosen Law Firm.
This is not the first time that a Chinese-funded company has encountered similar problems in the US stock market. Alibaba, which is also an e-commerce company, has faced the same dilemma shortly after landing on the NYSE.
Alibaba, which was listed in September 2014, was questioned by the US law firm for issuing misleading statements after three months of listing, because of the five major problems mentioned in the 'white paper' issued by the SAIC. Concealing the situation of regulatory investigations, it decided to sue Alibaba and some of its executives to the Federal Court of New York on the grounds of suspected violation of securities laws.
It is worth noting that many law firms that have filed a lawsuit have also participated in the prosecution of Alibaba.
In fact, the 21st Century Capital Institute found that it is not uncommon for US law firms to launch class actions against Chinese-listed companies listed on the US stock market.
Wind information data is not fully statistical. In recent years, more than ten companies including New Oriental (EDU.N), Jumeiyoupin (JMEI.N) and Lanting Jixiang (LITB.N) have encountered class actions.
Among them, in July 2012, seven law firms in the United States accused New Oriental of publishing false and misleading information, including financial statements exaggerating the size of assets or cash flow, and initiated class actions against them. In December 2014, the listing was only 7 months. Meiyou has also been subject to class action by US law firms. The reason is that the company and its specific executives have issued false and misleading statements to the investing public, and as a result, their market capitalization has shrunk by 60% in the next four months.
However, for the allegations in class actions, most of the stocks did not recognize the relevant facts. Lanting’s gathering is an exception. It is reported that in August 2013, four US law firms launched a class action lawsuit against Lanting, accusing them of making false and misleading. Sexual statement. A year later, Lanting gathered to settle a class action lawsuit for $1.55 million.
Overseas listing of 'pain'
The difficulties encountered by many of the above-mentioned Chinese stocks in the United States have, to a certain extent, reflected that the biggest difficulty for Chinese companies to list overseas is not the listing itself, but a possible one after listing. The 'pain' caused by the series of accidents.
Compared with the high-profit indicators necessary for the listing of A-share IPOs and the regulation of market pressure, the overseas market represented by US stocks and Hong Kong stocks has long been the domestic Internet and biomedicine. The first choice for enterprise listed financing. In the past 20 years, from the initial Internet companies' overseas listings, to the overseas listings of mutual gold companies that have been extended since the second half of last year, all this is true.
'This is a common question. If a company can go public on the A-share market, who wants to go overseas to go public? Or because the A-share listing threshold is higher, some Internet companies are in the early stage of burning money, and the profit indicator is definitely not up. Yes, not to mention the fact that many companies have problems with AB shares. ' On August 7, a large brokerage investment bank in Beijing said.
The above-mentioned investment bank explained that compared with the strict control of the A-shares on the profit indicators, the overseas market represented by the US market has a lower threshold for listing, and on the other hand, it is easier to meet the financing needs and the exit of overseas investors. .
On August 7, Shen Meng, executive director of Xiangxi Capital, told reporters that for some Chinese-funded enterprises with foreign investors, they will be more inclined to list overseas than A-share listings, because they should consider these investors. Exit question. He believes that at present, A-shares are not sufficiently friendly to foreign investors, whether it is a block trading system or a foreign exchange control system. This will also make these investors tend to require companies to go public overseas.
Except for the difference in the threshold of listing, the 21st Century Capital Institute learned that compared with the behavior supervision of enterprises after the listing of A shares, overseas regulators are more concerned about the supervision of the company after they are listed overseas. This is also considered to be the reason why China's stocks are frequently subject to class actions because of 'false and misleading statements'.
According to the relevant US securities laws, companies listed on the NYSE and Nasdaq must bear legal responsibility for major misrepresentations or omissions in public disclosure documents such as registration statements, periodic reports, etc. at the time of IPO. Legal liability is not limited to the company, but also extends to the company's directors, management and controlling shareholders.
It is worth noting that if the stock price of a company listed on the US stock market fluctuates or falls sharply, whether due to changes in the company's operations or other reasons, it may cause the company's shareholders to file a lawsuit alleging that the company, its directors or managers securities fraud .
'The overseas market represented by US stocks is strictly regulated, and there is a certain degree of difference between the strict supervision of A shares. It is precisely because of this that domestic companies need to face greater pressure and risks after listing overseas. Meanwhile, because overseas The market generally does not have a price limit, and has a complete long-short mechanism. If a risk event occurs, the company may easily cause large fluctuations in the stock price. On this basis, because the institutional-based overseas investors have a strong awareness of rights protection, Even more complicated the situation. ' Shen Meng said.
Opportunity behind 'pain'
Although domestic companies going abroad for listing need to face tremendous pressure from regulation and potential high litigation risks, there are also unlimited opportunities for development behind the 'pain'.
According to the data, since becoming a platform enterprise in 2017, in addition to the product quality problems that have been criticized for a long time, the existence of customers is not sticky, the customer unit price is low and other aspects are questioned, and it is more likely to become its future development. bottleneck.
The 21st Century Capital Institute believes that despite the current difficulties and many difficulties, not only has it been interviewed by domestic regulatory authorities, but also has been subject to class actions by overseas law firms, but the company is using this to achieve 'nirvana', just like the original Alibaba's smooth and outstanding encirclement, or the stagnation of this, still need to look at the company's future direction.
In fact, when the news about the interview was made earlier, the company also made a public announcement. The statement will fully cooperate with industry and commerce, and the market supervision department will conduct investigations to further crack down on counterfeit and counterfeit goods on the platform and strive to reach the society and consumers. expect.
'The strict regulation of the US stock market and the investment groups with institutional investors as the mains make them pay more attention to the development of the company itself, or focus on the fundamentals of the company, or look at the future growth of the company. The difficulty of enterprise development, but at the same time can make corporate governance and business development on the right track. 'On August 7, Dong Dengxin, director of the Institute of Financial Securities of Wuhan University of Science and Technology said.
In the previous interview, Bona’s chairman, Yu Dong, publicly stated that although the company’s valuation in the US stock market has not been high, in the previous interview, the company’s privatization of US stocks has been delisted. It is not entirely regrettable to list in the US market. He believes that the large-scale supervision and transparent trading rules of the US stock market have made the company 'real-real' healthy growth for five years. The solid business and steady growth performance have also become the company's smooth privatization. key.
The Beijing investment bank mentioned above said that after the US stocks have been tempered, Bona Film has a certain reference to its valuation after returning to the domestic market. This may help to some extent. Sub-A share IPO.
It is worth noting that the frequent overseas listings of high-quality Internet companies or other innovative companies may change to some extent in the near future, which will benefit from the current CDR issuance system.
Since the 'two sessions' this year, CDR has once become the 'hot word' of the domestic capital market, and the related system construction has been frequently introduced. By the beginning of June, Xiaomi Group became the first innovative enterprise to apply for the issuance of CDR, which foreshadowed this. In the end, the CDR issue of Xiaomi Group took the initiative to cancel on the day of the audit, and the CDR issuance system subsequently sent a message of suspension.
From the perspective of the general trend, the CDR system should be a high probability event, specifically the issue of time. In recent years, A shares have actively built multi-level capital markets, and are also reforming towards internationalization. The A-share issuance system has also ushered in. Some changes, these can be regarded as good news for domestic companies and even investors. Because on the one hand, they can attract outstanding companies to list in China, on the other hand, they can really enable domestic investors to enjoy the development of high-quality enterprises. The bonus. 'Dong Dengxin said.