Under the new regulations of the SEC and the Hong Kong stock exchange, the probability of China concept stocks returning to Hong Kong stocks has increased. Increased delisting risk of zhonggai shares: on December 2, 2021, the US SEC passed an amendment to determine the implementation of the foreign corporate liability act, which is in conflict with Chinese laws. Improving the convenience of Hong Kong stock listing: the Hong Kong Stock Exchange announced the consultation summary on the reform of optimizing the listing system of overseas Issuers on November 19, 2021, reducing the threshold for secondary listing application and providing an exemption period for delisted companies in the overseas market.
Regression path: privatization vs conversion. Privatization delisting: after the delisting of the company's repurchase of U.S. shares, the company applies for IPO or backdoor listing of A-Shares or Hong Kong shares again, which lasts a long time and requires high capital (the approval process of A-Shares is relatively more complex). Stock conversion: suspend the trading of U.S. shares, announce the method and proportion of stock conversion after the listing of Hong Kong shares, and implement stock conversion (applicable to Hong Kong shares).
After the delisting of US stocks, what are the changes in investor structure and valuation. Learning from the three operators, Chinese investors undertake the shareholding of local intermediaries in Hong Kong: before and after the announcement, the shareholding of Hong Kong stock connect, the three operators, increased significantly, while the shareholding of local intermediaries in Hong Kong decreased accordingly; There was no significant change in PE (TTM).
If U.S. stocks eventually withdraw from the market, they may face the impact of Hong Kong stock liquidity discount and dollar investors' selling volume. Among the China concept stocks that meet the conditions for the secondary listing of Hong Kong stocks, companies with high stock market value held by American mutual funds + pensions, including Baiji Shenzhou, yum China, Baidu and Netease, may face the impact of concentrated sales by US dollar investors.
Risk warning: policy promotion is not as expected; Historical experience does not represent the future.
