Research On The Path Selection And Effect Of The Return Of Chinese Concept Stocks

In the 1990 s,Chinese capital market was just emerging,the relevant market mechanism was inadequate,and many companies rushed to listing overseas.However,as the external environment faced by Chinese concept stocks in the United States has gradually deteriorated,it has triggered two waves of return of Chinese concept stocks.In particular,the promulgation of the “Foreign Company Accountability Act” by the United States in 2020,which has caused Chinese concept stocks companies to face a serious delisting crisis and a large number of Chinese concept stocks have returned to domestic listings.Compared with the first one,the relevant domestic policies have been gradually improved during the second wave of return.Herein,Hong Kong Stock Exchange amended the “Listing Rules” to permit secondary listings of qualified issuers,allowing some Chinese concept stocks to achieve a barrier-free return,which has attracted many Chinese concept stocks to list in Hong Kong.This paper selects the Internet retail giant-JD.com as the research object,and conducts an in-depth study of its secondary listing in Hong Kong using case study,event study and literature study method.Moreover,the return motivation,path and effect of JD.com were also analyzed.The research found that the main reasons for the return of JD.com are the existence of delisting crisis in the bad external environment in the United States,and the attraction of domestic policy reforms.In terms of the return way,JD.com can choose to return after privatization and delisting or directly return to listing by retaining the listing status of U.S.stocks.Herein,there are three main ways to directly return to listing by retaining the U.S.stocks: issuing CDRs,dual listing and the secondary listing.There are four main ways that JD.com can choose to return: privatization,CDR issuance,dual listing and secondary listing.For a large-capitalization innovative company of JD.com,a secondary listing is the best choice.When choosing a place to return to listing,it is usually dominated by A shares or Hong Kong shares.Generally,the valuation of A-shares will be higher,while the maturity and internationalization of Hong Kong stocks are better than that of A shares.Companies should make choice based on actual situation.JD.com’s secondary listing in Hong Kong has been fruitful in many aspects.For example,it has been received a positive market response in both U.S.and stocks;the stock liquidity of JD.com has also been enhanced;it has expanded financing for the company to promote corporate strategic transformation and improved the financial situation of companies.This work finds that for Chinese stock companies should reasonably choose the return method and return to the listing place,as well as strengthening the internal control of the company and improving the quality of information disclosure.Meanwhile,the A-share market should actively promote the reform of the registration system and step up the improvement of the CDR issuance system,so as to provide more diversified options for the return of Chinese concept stocks.This work not only enriches the relevant research on the reasons,paths and effects of the Chinese concept stocks return,but also provides experience and reference for the successful return of Chinese concept stocks to listing.Furthermore,this study also provides a realistic basis and reference suggestions for how Chinese capital market can continuously improve and modify the listing rules and attract high-quality companies to return.