China regulator studying impact of overseas-listed firms relisting in China
Reuters
Published May 06, 2016 07:05AM ET
China regulator studying impact of overseas-listed firms relisting in China
By Samuel Shen and Paul Carsten
SHANGHAI/BEIJING (Reuters) - China's securities regulator said it is analyzing the potential impact of overseas-listed Chinese companies coming home to relist on mainland exchanges, potentially bad news for tech firms trying to come home and cash in on high valuations.
The valuation gap between the domestic and overseas market and speculation on shell companies should be paid attention to, Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), said at a weekly briefing on Friday, according to remarks posted on CSRC's official Weibo microblog.
The CSRC is studying the market impact of overseas-listed Chinese companies relisting in the A-share market through IPOs, mergers and acquisitions, as well as restructuring, Zhang added.
The regulator made the comments following rumors that it would block domestic listings by companies currently listed overseas, the Shanghai Securities News reported.
"For companies already in the process of relisting at home, the faster they get done the better because regulatory uncertainties are rising," said a banker, who declined to be identified because they were not permitted to speak to media.
"We may also suggest that some clients opt for the new third board, given that there are fewer regulatory hurdles."
The news may reassure Chinese stock investors, who worry that battered domestic markets are in no condition to absorb another round of IPOs by hot tech companies, seen as cannibalizing funds from already-listed companies and weakening overall market performance.
Domestic media have reported at least 20 Chinese firms listed overseas are considering delisting to come back and relist in China, some of them via "back-door listings" or "reverse mergers" that involve injecting assets into an already listed firm, thus skipping the long approval queue for IPOs.
An overall dilution in share values is a point of particular sensitivity as a flood of new IPOs was widely blamed for contributing to a massive stock market crash last summer.
Any move by the regulator could affect the wave of Chinese companies, particularly in the tech sector, who last year decided to de-list from U.S. stock exchanges and instead trade on domestic boards, a trend that intensified as Chinese stock markets rallied through mid-2015.
Those firms include Internet security and search firm Qihoo 360 Technologies Co Ltd (N:QIHU), and dating app Momo Inc (O:MOMO), backed by Alibaba Group Holdings Ltd (N:BABA), both of which said they plan to delist.
Get The News You Want
Qihoo declined to comment when contacted by Reuters. Repeated calls to Momo offices were not answered.
Other Chinese companies have already raised funds and gone private on the expectation that they would be welcomed at home.
Domestic tech tickers still enjoy extremely high valuations relative to global peers, some of them in triple digits.
The ChiNext Growth Board <.CHINEXTC> boasts an average price earnings ratio of 65, compared with 21 for the Nasdaq 100 (NDX).
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.