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(单词翻译:双击或拖选)
Overseas-listed Chinese tech giants are said to be among the first planning for a listing in China via the new China Depositary Receipts program.
Through the issuing of CDRs, domestic investors1 will be given the ability to invest in Chinese tech giants such as US-Listed Alibaba and Baidu.
CRI's Guan Chao has more.
The United States has long been a favored destination for public offerings by Chinese tech companies.
The primary reason is that the American IPO registration2 system allows companies to operate at a loss when they apply for a listing.
The number of U.S.-listed Chinese companies rose to 25 last year, an increase of 125 percent year on year.
All the companies fall into three main categories: education, online shopping and finance.
Theodore Shou, chief investment officer at Skybound Capital, says there are reasons for the surge.
"It has a lot to do with many legacy3 issues, for example, the VIE structure and also when tech start-ups really start their business, most of them are backed by U.S. investors or US dollar-denominated investors. Many of them financed the growth of companies over all these years, and now finally they come to the stage where they need to get some returns and they prefer these returns to be U.S. dollar."
However, the back door listing of Chinese tech company Qihoo 360 late last year has sent a signal to Chinese firms that there is still plenty of interest at home for investors in Chinese companies.
After returning to the mainland A-share market last November, Qihoo 360's market cap has increased 6-fold.
Yang Zhongning, investment counselor4 at Industrial Securities, says the biggest advantage of CDRs is that they allow shares of overseas-listed companies to be traded both at home and abroad.
"What distinguishes CDRs from the previous practices of delisting from U.S stock exchanges and then relisting at home is that with the CDRs, a company can be traded in two markets. I think that the price of ADR will have some influence on its counterpart CDR in China."
Despite the opportunties, Yang Zhongning is also warning Chinese investors that they need to be cautious when trading in different markets.
"If investors trade stocks in two markets at the same time, they have to realize that it concerns the cross-border capital transactions, meaning those transactions will be subject to foreign exchange regulations. Another unavoidable issue is the fluctuations5 of foreign exchanges, which may add uncertainties6 to the cross-border arbitrage7."
Chinese business publication Caixin is reporting Alibaba, as well as JD.com, are also expected to issue CDRs as early as June.
1 investors | |
n.投资者,出资者( investor的名词复数 ) | |
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2 registration | |
n.登记,注册,挂号 | |
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3 legacy | |
n.遗产,遗赠;先人(或过去)留下的东西 | |
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4 counselor | |
n.顾问,法律顾问 | |
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5 fluctuations | |
波动,涨落,起伏( fluctuation的名词复数 ) | |
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6 uncertainties | |
无把握( uncertainty的名词复数 ); 不确定; 变化不定; 无把握、不确定的事物 | |
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7 arbitrage | |
n.套利,套汇 | |
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