The Research On Red Chips Returning To Mainland Stock Market

The concept of red chips was born in Hong Kong stock market in the 1990's. Over the past 20 years, red chips have soundly developed and entered into a new period with the rising tendency.20 years ago, Red chip firms chose Hong Kong as their listing market, which is mainly because that mainland stock market was not mature enough to fulfill those firms financing requirements. However, in recent years, in virtue of the rapid economic growth, China has become a major player in the global economy, which also gives a great contribution to the progress of mainland stock market in many dimensions, such as market scale, market capacity and financing ability. Nowadays, mainland stock market has established a favorable environment for investors and enterprises to conduct their investing and financing activities, and in the meantime, China's dazzling economic growth increases the market expectation to RMB's revaluation, which is also a stimulus to encourage red chip firms returning to A share market.Currently, there are four models for red chips returning to the mainland market. They are Liantong model, reverse takeover model, direct issuing A shares model and CDR model. Direct issuing A shares is a model with a simple procedure and less technical obstacles, so it is favored by the market and red chip firms. Meanwhile the returning of red chip enterprises to the mainland stock market will generate a certain level of positive influence on many aspects, especially pushing forward the internationalization course of the domestic stock market.