Research On The Strategy And Effect Of Anti-short Selling Of Hong Kong Listed Company

In the 1990s,with the continuous opening of China’s capital market,Chinese enterprises began to approach the international financial market.Since 2010,however,there have been frequent short selling of Chinese companies,and some Chinese companies have been forced to delist.Since 2016,short sellers have turned to Hong Kong market,and mainland companies listed in Hong Kong have become new targets for short sellers.At first,most listed companies could not respond in a short period,but after accumulating a certain amount of market experience,some excellent listed companies were able to respond and fight back through effective strategies.The Hong Kong capital market is playing an increasingly important role as a large number of Chinese companies return to the Hong Kong stock market due to the connectivity between the mainland and Hong Kong capital markets.As short selling is increasingly common in the financial market,it is of great practical significance to study the antishort selling strategies and effects of Hong Kong listed companies.In this paper,the case study method is adopted to analyze the short event,antishort selling strategy and effects,mainly based on the following reasons:First,the case study method can more comprehensively analyze the occurrence process of short event,further explore how listed companies respond to anti-short selling event,and form a widely applicable systematic view;Second,compared with the single case study,the double-case study method can explain the influence of similarities and differences between cases on the research results,so as to make the cases contrast each other and form more convincing conclusions.In this paper,AAC Technologies and Cogobuy Group are selected as the case enterprises mainly for the following reasons:First,the cases are typical.Through comparative analysis of AAC Technologies and Cogobuy Group,the similarities and differences of anti-short selling strategies can be explored,and the effect of anti-short selling can be more clearly presented.Second,the richness of data.The short selling event of the two listed companies has a great impact on the securities market of Hong Kong.The related news reports are comprehensive and rich,which can provide reference for the research from different angles.Among many cases of Hong Kong listed companies being shorted,the anti-short selling events of AAC Technologies and Cogobuy Group deserve our in-depth study.Both of them are electronic technology companies listed in Hong Kong stock market,and they were shorted by short sellers successively in May 2017.Due to different antishort selling strategies,they obtained widely different short-term market reactions and long-term stock price trends.AAC Technologies took a series of measures including emergency response,supplementary response and joint external response,which recovered investors’ confidence.On the day of resumption of trading,the stock price rose by 12.05%compared with that before the suspension,and the stock price recovered for a short period and continued to rise,gradually rising to the level of the stock price before being shorted.However,Cogobuy Group only took emergency measures,which did not dispel investors’ doubts.On the day of resumption of trading,the stock price fell 23.33%compared with that before the suspension,and remained depressed for a long period.On the basis of case analysis,this paper draws the following conclusions:First,listed companies should disclose information at the first time after suffering short selling,and respond immediately in the face of short selling crisis events,so as to meet the information needs of investors,and better grasp the initiative in crisis communication management,recover investors’ confidence and curb stock price decline.Second,high-quality information disclosure is an effective way for listed companies to counter short selling.Compared with using the internal audit team of the company,hiring an independent agency to conduct an investigation can make the information disclosed more convincing and dispel investors’ doubts.Third,the time and strategy of the listed company can be divided into several steps:(1)emergency response to answer and refute the questions at the first time after the encounter of short selling;(2)Supplementary response to further restore the company’s image and investor confidence;(3)Combine external responses to improve the width of anti-short strategy;(4)Follow-up response.When the above steps fail,the company can consider privatization and delisting or solve the problem by legal means.This paper has a certain theoretical significance to study the strategy and effect of anti-short selling in Hong Kong listed companies.Many scholars have conducted indepth research on short selling mechanism,and there are abundant literatures on short selling mechanism,but there is a lack of research on anti-short selling mechanism.By analyzing the strategies and effects of anti-short selling of Hong Kong stock companies,this paper adds relevant theoretical analysis on the anti-short selling mechanism,enriching the relevant research on the anti-short selling strategy of listed companies,and helping listed companies to improve their corporate governance mechanism,establish a comprehensive short-selling prevention mechanism and effective coping strategies.This paper also has a strong practical significance.First,for the regulatory authorities,it is necessary to strengthen the supervision of short sellers to provide certain help and protection for listed companies.At present,the supervision mechanism of short selling institutions is not perfect,so we should strengthen the supervision of short selling reports issued by short selling institutions,so as to guarantee the healthy development of the capital market.Second,for listed companies,this paper provides some references for listed companies to effectively deal with anti-short selling.No matter it is A-share,Hong Kong stock or overseas listing,listed companies may face the crisis and risk of market short,so the company should establish a long-term risk management mechanism,so as to improve its anti-short ability.