An Analysis On The Differences Of Stock Pricing For China's Private Enterprises Among A-share Market And Stock Markets Oversea

The 2000 saw an increasing amount of Chinese firms' listing in oversea market,and they are classified as an unique group called overseas-listed Chinese firms.However,greater number of them went private and returned to A-share market from 2012.Those who choose to return to A-share market declare that they are treated unfairly in overseas stock markets,leading to their privatization from overseas markets.The trend of overseas-listed Chinese firms' return to A-share market facilitates us with a perspective to analyze the differences of pricing among A-share market and stock markets overseas.In the view of valuation,there are two factors that may lead to the underpricing of overseas-listed Chinese firms.Firstly,the overseas markets have lower level of price.Secondly,Chinese firms suffer from discrimination by overseas markets when pricing their securities.When we probe into these two questions,we are discussing the differences of pricing among A-share and overseas stock markets,and we may find out whether Chinese firms are treated unfairly in overseas markets.The major contribution of this paper lies in that we summarize the formation mechanism of the differences of pricing among A-share and overseas stock markets.Then,we employ the SFA to evaluate the differences of pricing among stock markets.We find that Chinese firms receive different price in different stock markets at different time.Firstly,we summarized the reasons for differences in pricing of different markets from the view of issuing system,investor sentiment and investor preference.Given that A-share market practices a special issuing system,the supply of stock is limited,which may lift the valuation level in A-share market.While the financing system is mature in developed countries,and their supply and demand in stock markets keep balanced,making their valuation smooth.Secondly,we employ SFA when analyzing the pricing differences among different markets.The SFA puts out the pricing efficiency of different markets,which provides us with a base for comparison.In addition,this paper measures the pricing efficiency of Chinese private enterprises in different markets,comparing it with the pricing efficiency of the whole markets overseas.This way,we can find out whether Chinese private firms are treated unfairly or not.We can conduct some interesting conclusions with the empirical results.First,the pricing of stock is sufficient in A-share and NASDAQ market,while the pricing of stock in Hong Kong market is insufficient between 1999 and 2002.The underpricing in this period may relate to the financial crisis in Asia and the burst of IT bubble in America.Secondly,Chinese private firms are treated fairly in NASDAQ market,while suffer discrimination in Hong Kong market between 2008 and 2015.The pricing efficiency in this period is 0.445 for Chinese private firms while the pricing efficiency is 0.99 for the whole market.Thirdly,the motives of return to A-share differ between NASDAQ-listed and Hong Kong-listed Chinese private firms.The Hong Kong-listed Chinese private firms suffer not only the lower pricing level the Hong Kong market itself,but also the discrimination in Hong Kong market.Therefore,those listed in Hong Kong market have higher motives to return to A-share in the view of valuation.The sufficient pricing in A-share market could attract excellent enterprises,improving the overall quality of enterprises in A-share market.Those who choose to return to A-share doesn't lack capital when they went private,they went back to Ashare for other reasons.Therefore,we should improve our approval system to keep enterprises home.