On Motivation,Path And Performance Of Chinese Concept Stocks Returning To Domestic Capital Market

Due to the financing needs of enterprises,the low threshold of listing,the short review period and the low difficulty of issuing in the American capital market,some Chinese high-quality state-owned enterprises began to go public in the U.S.since 1992,and then a large number of Internet companies choose to list in the U.S.as well.However,there had been two waves of privatization delisting of Chinese concept stocks.The first time was Chinese concept stocks collectively suffered from short-selling crisis in 2011,and the second was affected by continued rising market price of domestic capital market,the difference between the valuation of domestic and American capital market and the release of domestic support policies around 2015.According to incomplete statistics,more than 70 Chinese concept stocks have been privatized and delisted from the American capital market since 2011.The "Public-Private-Public"(referred to as "PPP")strategy is a privatization return form commonly used by Chinese concept stocks.Therefore,after the completion of the privatizatio,the next step for most companies is to seek re-listing in the domestic capital market.Backdoor listing is a common path in the past few years,and the Chinese concept stocks such as Focus Media,Giant Network,Perfect World,all returned to domestic A-share market through the backdoor.In May 2016,the China Securities Regulatory Commission suspended the Chinese concept stocks return to A-share by IPO,mergers and acquisitions,which blocked the return of Chinese concept stocks.At this period,in the context of the capital market supporting the "Four New Economy",Qihoo 360 reversely merging Jiangnan Jiajie successfully passed on December 29,2017,and the IPO of Wu Xi Apptec quickly approved on March 27,2018.Since the second half of 2018,the IPOs of Mindray Medical,Yuxin Technology and Mingyang Intelligent have also successfully passed,which has provided a new opportunity for Chinese concept stocks returning to domestic capital market.Wu Xi Apptec is a member of the privatization wave of the Chinese concept stocks in American capital market in 2015.It is also the first example of Chinese concept stock that successfully returned to A-share in the form of IPO,and has set a precedent for the overseas listed companies to split up subsidiaries into the NEEQ.So the return path has strong research value.Therefore,this paper selects Wu Xi Apptec,which successfully returned to A-share in the form of "one split up into three" as a research case,and explores its internal and external motivations of its path selection based on its returning purposes,returning abilities,and its macro environment,industry situation and external regulatory environment.The paper also analyzes its carve-out return process and its innovations,identifies the risks faced and the preventive measures taken during the return process,conducts research on the market and company performance after the return,and focuses on the analysis of the advantages and disadvantages,applicable conditions and promotion value of the carve-out form.We find that Wu Xi Apptec has pulled 16 daily limit boards after returning to the A-share main board and the company's valuation has improved with the continuous increase of the stock price and better financial performance in 2018.The secondary market transactions of Syn The All Pharmaceutical is active since its listing in the NEEQ,and the company's valuation is also rising.The market performance of Yaoming Bio has been good since its listing on the Hong Kong Stock Exchange,and the stock price has continued to fluctuate and the operating performance has maintained rapid growth.Furthermore,the incident of Wu Xi Apptec's return to the A-share main board has a positive spillover effect on the stock prices of its subsidiaries and the health-care industry.In order to guide the return of high-quality Chinese concept stocks and promote domestic capital market reform,this paper puts forward policy recommendations for the Chinese concept stocks which adopt the "PPP" strategy and seek to return to domestic capital market and regulatory agencies.For the Chinese concept stocks,we propose to combine the company's own characteristics and external market conditions when choosing the return path,and propose to determine the reasonable fundraising scale and issue price when applying for IPO.For the regulatory agencies,we advise to promptly and steadily approve the registration reform,improve the multi-level capital market system and promote the diversification of the return path of the Chinese concept stocks.