Frost & Sullivan insights
7month28Today, Keda Manufacturing, Shanhan Co., Ltd., Green Energy Materials Group Co., Ltd., Guoxuan High-Tech Co., Ltd.4homeAissued by a listed companyGDRIt was officially listed on the Hong Kong Stock Exchange, welcoming the first batch of Chinese enterprises.
The first batch of Chinese enterprises issuedGDRWhat are the significant implications of listing on the Hong Kong Stock Exchange? Will it attract more companies to list there?GDRIs listing expected to become the mainstream method for Chinese companies going global? Companies listed on the Hong Kong Stock Exchange can also list on domestic exchanges. Is there a possibility of achieving two-way connectivity in the future? Frost & SullivanFrost & Sullivan,Mr. Lu Jing, Partner and Managing Director of Frost & Sullivan's Greater China Region (hereinafter referred to as 'Frost & Sullivan'), was interviewed by Securities Daily to discuss the issuance of Chinese corporate bondsGDRAnd the reasons for listing on the SSE and future trends.
Securities Daily
Since the beginning of this year, Chinese enterprises have accelerated their pace of overseas financing, issuingGDR(Globally Depository Receipts) fundraising has become the main form, with Switzerland being a popular listing destination.
According to the existing arrangements,7month28Today, Keda Manufacturing, Shanhan Co., Ltd., Green Energy Materials Group Co., Ltd., Guoxuan High-Tech Co., Ltd.4homeAissued by a listed companyGDRThe company was officially listed on the Hong Kong Stock Exchange, welcoming its first batch of Chinese enterprises. It is reported that the exchange has established a dedicatedGDRThe listing and trading department helps to enhance the visibility and tradability of these securities, thereby improving liquidity. First batch4anGDRThe project's depositary banks are all Citibank.
"Current IssuanceGDRGoing public is an important measure for domestic enterprises to respond to the call of capital market policies, deepen the interconnection between China and European capital markets, and utilize overseas capital markets to promote the development of the real economy. 'Xu Kechen, head of Citi's depositary receipts business in China, said in an interview with a reporter from Securities Daily that expanding overseas direct financing channels can not only enhance the financial strength of enterprises but also attract foreign professional investment institutions and long-term industrial investors. This further optimizes the equity structure of enterprises, improves the transparency and standardization level of corporate governance, and provides a solid guarantee for the high-quality development of enterprises.'
GDRHigh financing efficiency
this year2month11On the same day, the China Securities Regulatory Commission (CSRC) issued the 'Regulatory Provisions on the Interconnection and Connectivity of Depository Receipts between Domestic and Overseas Stock Exchanges', expanding and optimizing the interconnection mechanism of domestic and overseas capital markets. Domestically, eligible listed companies on the Shenzhen Stock Exchange are included, while internationally, it has been extended to Switzerland and Germany.
thereafter,APromotion of the joint-stock companyGDRThe issuance and listing have sparked a minor climax. Simplicity and convenience areGDRA major feature of fundraising. As mentioned above4homeATaking listed companies as an example, in terms of the time taken to complete relevant internal and external procedures, fromGDRThe project is officially launched (the proposal has been reviewed and approved by the board of directors) to7month28Official launch, time varies3Over a month, at most2Over a month.
Enterprises throughGDRFinancing not only takes less time but also involves a larger amount of fundraising, resulting in higher fundraising efficiency. Relevant announcements show that4The amount of funds raised at home is1.73billion dollars to6.85between hundreds of millions and billions.
"Chinese Enterprises IssuingGDRListing on the Hong Kong Stock Exchange not only broadens the financing channels for domestic listed companies overseas, which is beneficial to the long-term development of enterprises, but also enhancesA"The internationalization level of the stock market has attracted more overseas investors." Mingming, chief economist at CITIC Securities, told the reporter of Securities Daily.GDRThe shorter listing review time and the wider range of financing targets it faces are conducive to enterprises exploring overseas markets, optimizing shareholder structures, and enriching financing channels. It is expected that in the futureGDRIt will be favored by more domestic listed companies.
"Switzerland, as a world-leading financial center, has a relatively mature financial environment and capital system. Its market openness and fairness are also higher, which has greatly attracted Chinese listed companies. In the future, more outstanding Chinese enterprises will go public in Switzerland." Lu Jing, Partner and Managing Director of Frost & Sullivan Greater China, told reporters.
"At present,GDRFinancing methods have become one of the important channels for Chinese enterprises to raise funds overseas. 'Xu Kechen said that with relatedGDRWith the successful release of the project, more listed companies will join in the future, makingGDRIt has become a mature sector and an important part of China's capital market.
The two-way connection is worth looking forward to.
Based on the interconnection framework, eligible companies from both China and Europe can list and depositary receipts be issued on each other's capital markets to raise funds.
According to Xu Kechen, the interconnection framework includes two directions: Chinese-funded enterprises going overseasGDRFormal listing (Westbound) and overseas related exchange-listed entitiesCDR(CDR) listed on domestic exchanges (domestic listing).
Industry experts believe that withAThe level of opening up the stock market to foreign investors is gradually increasing, and more overseas companies from countries such as Switzerland will comeAThe listing of stocks has raised funds, achieving two-way connectivity between Chinese and foreign capital markets.
"In recent years, China's capital market has achieved remarkable development results,AThe stock market has become the world's second-largest, attracting a significant number of companies listed on the Hong Kong Stock Exchange. Due to the need for higher returns and risk diversification, domestic investors have a demand to allocate overseas assets. The listing of Hong Kong Stock Exchange companies in China will enrich investment targets. "Lu Jing said that the interconnectivity framework has made a good start, and with continuous improvement in related laws, systems, etc., it is very likely that two-way connectivity will be achieved in the future."
It is clear that opening up to the outside worldAThe general trend of the development of the stock market. As the competitiveness of domestic listed companies continues to strengthen, more domestic enterprises may go public overseas in the future. At the same time, withAWith the increasing openness of the stock market to foreign investors, it is expected that more overseas companies will choose toAThe market for stock financing is undergoing restructuring, and two-way connectivity is worth looking forward to.
Xu Kechen revealed, 'According to our understanding, there are some European companies with real needs for layout in the Chinese market that areCDRI'm quite interested in the mechanism. I believe that with the continuous expansion and optimization of interconnect services, it will surely attract high-quality overseas enterprises to list on domestic exchanges, thus truly achieving two-way connectivity.
*This article is reprinted from Securities Daily, reporter Xing Meng , Original title: First batch4Chinese enterprisesGDRDebut on the Hong Kong Stock Exchange The channels for overseas direct financing have been extensively expanded ">
Frost & Sullivan Insight & Extended Readings
Q: The first batch of Chinese enterprises issuedGDRWhat are the significant implications of listing on the Hong Kong Stock Exchange? Will it attract more companies to list there?
A: AA listed company issues through overseas marketsGDRIt has enhanced the interconnectivity between China's capital market and European capital markets, broadened the two-way financing channels for enterprises, which is of great significance for serving the stable and healthy development of the real economy. It also demonstrates China's determination to open up its capital market in both directions to the international community. At the same time, Sino-US relations and the international situation have a significant impact on Chinese companies listed in the US. Although the stock prices of Chinese concept stocks have rebounded recently, compared to2021The decline at the year's high was still significant. Actively expanding financing channels in European markets reduced the risks and uncertainties of a single listing for enterprises, enhancing their ability to withstand adverse factors such as geopolitical elements and trade barriers.
The choice range for Chinese high-quality enterprises to go public overseas has been further expanded, solving the problem of refinancing for listed companies. It provides international investors with an even better investment target, meets the needs of international capital layout, and expands the selection range for domestic investors' investment targets. Switzerland, as a world-leading financial center, has a relatively mature financial environment and capital system, as well as higher market openness and fairness. These provide convenient conditions for Chinese listed companies to list and raise funds in Switzerland, thus making it highly attractive. In addition, going public overseas plays a positive role in promoting enterprises with a deep overseas layout experience and an international development strategy. Under the combined effect of various factors, more outstanding Chinese enterprises will drive to list in Switzerland in the future.
Q:GDRIs the listing expected to become the mainstream method for Chinese companies going public overseas?
A: GDRissuance and overseasIPO listingCompared with having obvious advantages, GDRThe issuer is a listed companyAThe stock company has a higher reputation.GDRThe issuance review has become very standardized and mature, with a review time of approximately1 - 2The workload and execution cycle involved are much less than those overseas within [X] monthsIPO listingTotal cost is lower than that overseasIPO listing.
Chinese listed companies issue throughGDRIssuing is conducive to broadening the international financing channels of enterprises themselves, enhancing the internationalization level and corporate governance of listed companies in China, as well as improving their international recognition and influence.GDRIt is possible to introduce internationally and domestically renowned investors as shareholders for Chinese companies, thereby diversifying equity, improving corporate governance mechanisms, and stimulating innovation vitality. Domestic listed enterprises are exploring the issuance of variousGDRThis approach not only expands traditional overseas listing financing channels but also promotes the breadth and depth of cooperation between China and Europe's capital markets, holding broad prospects for future corporate financing.
