2020年CRI Chinese tech giants gear up to return homeland stock market via CDRs

 

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 )

参考例句：

• a con man who bilked investors out of millions of dollars 诈取投资者几百万元的骗子
• a cash bonanza for investors 投资者的赚钱机会

2 registration   

n.登记，注册，挂号

参考例句：

• Marriage without registration is not recognized by law.法律不承认未登记的婚姻。
• What's your registration number?你挂的是几号？

3 legacy   

n.遗产，遗赠；先人(或过去)留下的东西

参考例句：

• They are the most precious cultural legacy our forefathers left.它们是我们祖先留下来的最宝贵的文化遗产。
• He thinks the legacy is a gift from the Gods.他认为这笔遗产是天赐之物。

4 counselor   

n.顾问，法律顾问

参考例句：

• The counselor gave us some disinterested advice.顾问给了我们一些无私的忠告。
• Chinese commercial counselor's office in foreign countries.中国驻国外商务参赞处。

5 fluctuations   

波动，涨落，起伏( fluctuation的名词复数 )

参考例句：

• He showed the price fluctuations in a statistical table. 他用统计表显示价格的波动。
• There were so many unpredictable fluctuations on the Stock Exchange. 股票市场瞬息万变。

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

参考例句：

• One of the uncertainties of military duty is that you never know when you might suddenly get posted away. 任军职不稳定的因素之一是你永远不知道什么时候会突然被派往它处。
• Uncertainties affecting peace and development are on the rise. 影响和平与发展的不确定因素在增加。 来自汉英非文学 - 十六大报告

7 arbitrage   

n.套利，套汇

参考例句：

• This is an example of arbitrage.这就是套利的一个例子。
• That is interest arbitrage in practice.这就是所谓的套利。