Research On The Motivation,Path And Impact Of The Return Of Chinese Concept Stocks

The return of Chinese concept stock companies has been widely concerned by the capital market.In the early stage,most Chinese companies listed overseas because of the immaturity of the domestic capital market.However,the inadequate understanding and trust in the overseas capital market made them under great pressure.They encountered various situations like malicious short-selling,strict regulation and valuation deviation.In addition,the domestic capital market has been improved and the policy environment has been gradually relaxed in recent years,which has formed the return trend of Chinese companies.According to the past experience,the return of Chinese concept stock companies usually adopt the path of re-listing in the Chinese stock market after privatization,which is a complicated and time-consuming process with certain risks.On November 26,2019,Alibaba Group made its second listing in Hong Kong,becoming the first to practice this whole new path of Chinese companies’ return.Therefore,this paper takes the second listing of Alibaba Group as a case,hoping to analyze the experience that is worth learning and provide reference for other Chinese companies with the intention of returning to the domestic capital market.Based on the summary of the relevant literature at home and abroad,circumvention theory,security-market segmentation theory and information asymmetry theory,this paper analyzes the motivation and path of Alibaba’s return.Then,this paper collects relevant data of Alibaba’s stock price and financial indicators before and after its return,and uses event study method and comparative analysis method to study the impact of Alibaba’s return on company finance,company operation and capital market.Finally,some suggestions are put forward for other Chinese companies and policy makers.The results of this study show that there are four motivations for Alibaba’s return.It is not only to diversify the regulatory risks brought by the US stock market,but also driven by domestic reasonable valuation,favorable policies,and the requirements of the company’s development strategy.As for the choice of return path,Alibaba adopted the way of secondary listing in Hong Kong stock market,after four important steps: stock split,retaining the listing of US stock market,applying for exemption and realizing cross-market circulation.Finally,Alibaba’s return has brought many influences.First,in terms of company finance,Alibaba’s return has received positive market reaction,and the company’s financial performance has improved.Secondly,in terms of company operation,Alibaba’s business scope and user base has been further expanded.Finally,Alibaba’s return plays an exemplary role in the stock market.It has also enhanced benefits of the Hong Kong Stock Market.Based on the above research results,this paper gives corresponding suggestions for China concept stock companies and policy makers.Chinese companies should rationally consider the necessity of regression and reasonably plan the regression path,and at the same time pay attention to their business development.Relevant policy makers should not only consolidate and expand the achievements of reform and further attract high-quality Chinese companies to return,but also fundamentally improve the environment of China capital market to prevent the loss of high-quality companies.