For the return of new economic enterprises, we must first embrace in terms of concepts and policies, but at the same time we must be cautious in supervision and system.
As the global capital market's pursuit of "unicorns" intensifies, the capital market in mainland China is opening its doors to new economic enterprises in an unprecedented reform posture.
On March 30, the General Office of the State Council forwarded the Notice of the CSRC on Several Opinions on Piloting the Issuance of Stocks or Depositary Receipts in Innovative Enterprises (hereinafter referred to as the “Opinions”). The Opinions cover large-scale red-chip companies that have been listed overseas, as well as red-chip companies and domestic registered enterprises that have not been listed overseas. Framework provisions were made from various aspects such as the pilot object and selection mechanism, issuance conditions and review mechanism, information disclosure and daily supervision, and investor protection requirements.
This is the clarification of many previous regulatory statements, which means that at the policy level, there are clear institutional arrangements for welcoming new economic enterprises to return to A. The roadmap for the return of innovative companies is becoming clearer.
From the beginning of March, the news that the "CSRC opened up an IPO fast track for the four-industry unicorns" was reported. During the two sessions of the National People's Congress, the government reported that "to support the listing of high-quality innovative enterprises," and the State Council approved the "Opinions". Beyond imagination.
"The orientation of this new regulation is good, the purpose is clear, and the pilot-first approach represents the innovation of the regulatory concept." Guo Hong, chairman of Zhongguancun Bank, said in an interview with Caijing that the selection criteria of the pilot enterprises are more than market expectations. To be high, it is expected that fewer companies will eventually meet the criteria through layer screening. Taking into account the market's tolerance, the initial stage will be more cautious, first to make a certain demonstration effect.
In Guo Hong's view, the essence of the capital market embracing the new economy is to use the capital market “tools” to serve the new economic enterprises, and then promote the innovation-driven national industrial upgrading, so that A-share investors can share the development results of the new economic industries and enterprises. . For the return of new economic enterprises, we must first be tolerant in terms of concepts and policies, but at the same time we must be cautious in supervision and system.
The "Opinions" clarified the criteria for the identification of new economic companies, and used high-quality new economic companies as a pilot to systematically promote the pilot companies to land in A-shares. Its content is rich, and the reform efforts are beyond expectations.
In terms of issuance methods, the Opinions not only allow pilot red-chip companies to issue depositary receipts in the domestic capital market, but also allow for the issuance of stocks and listings, and can apply for listing of stocks in China; domestically registered pilot enterprises can apply for stocks issued in China. Listing.
Correspondingly, the "Opinions" also exceeded expectations in setting the conditions for breaking through legal obstacles. Long-term troubles for high-quality unicorn companies landing A shares of different shares, VIE structure problems have been effectively circumvented.
The "Opinions" clarify that the shareholding structure, corporate governance, operational norms and other matters of the pilot red-chip enterprise can be applied to the laws and regulations of the overseas registration company law, and not only the CDRs are issued, but also the pilot enterprises with different voting rights and VIE structure are accepted. Moreover, in the issuance of stocks, special handling mechanisms have been set up for pilot companies with VIE architecture.
On the selection target, the pilot is aimed at a few high-tech companies that are in line with national strategy, have core competitiveness, and have high market recognition. They belong to the Internet, big data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, biomedicine, etc. The technology industry and strategic emerging industries have reached a large scale of innovative enterprises.
However, Yikai Capital believes that, given that these industries and the SFC industry classification are not yet one-to-one, whether a company belongs to the above-mentioned industry's defining standards remains to be further refined. The refinement method may refer to the “Guidelines for Further Improving the GEM Recommendation Work” issued by the CSRC at the launch of the GEM, and clarify the industries that support and still need to be demonstrated.
In terms of selection criteria, the threshold of "unicorn" has improved a lot compared to previous market expectations. Large-scale red-chip companies that have been listed overseas have a market capitalization of at least RMB 200 billion; innovative enterprises that have not yet been listed overseas (including red-chip companies and domestic registered enterprises) have an operating income of not less than RMB 3 billion in the most recent year. The valuation is not less than 20 billion yuan, or the operating income is growing rapidly. It has independent research and development, international leading technology, and is in a comparatively advantageous position in the competition of the same industry.
There are more discussions on the market for the recognition criteria of the 20 billion yuan valuation. Some brokerages believe that the valuation of unlisted companies is based on the future development of the company and the result of negotiations between the company and investors. The details have yet to be further clarified. According to the "Finance" reporter, the fund industry association may soon issue corresponding guidance documents.
According to the calculation of the chief economist Guan Qingyou of the Financial Research Institute, there are 7 overseas listed companies that meet the requirements of the “large-scale red-chip enterprises” in the pilot conditions. They are Hong Kong-listed Tencent Holdings, and US-listed Alibaba, Baidu and Jingdong. , NetEase, China Telecom, China Mobile.
In the list of innovative companies that have not yet been listed, according to the "2017 China Unicorn Enterprise List", there are only 30 companies with a valuation of more than 20 billion yuan last year, including Xiaomi, Ant Jinfu, Didi, Mei Group Review, Today's headlines, rookie network, fast hands, Dajiang innovation, joint film medical, Meizu, Tongcheng travel. Only 23 companies meet the above industry requirements.
This is more cautious than previously expected by the market, and is much different from the falsified list of unicorns in the Ministry of Science and Technology.
It is worth noting that, considering that innovative enterprises have the characteristics of large investment, fast iteration, and easy subversion, the new policy will be promoted in a pilot manner during the process of supporting the issuance and listing of innovative enterprises.
"Pilots can avoid some uncontrollable risks and prevent them from going up." Guo Hong told the Caijing reporter.
The real pilot enterprises have yet to be selected by the CSRC and selected by the CSRC Establishment Committee. According to the "Opinions", the CSRC will set up a scientific and technological innovation industrialization advisory committee to give full play to the role of relevant industry authorities and experts and scholars, comprehensively consider relevant factors, and strictly select pilot enterprises.
According to the "Opinions", "comprehensive considerations" will have 12 dimensions: business model, development strategy, new product output, innovation capability, technical barriers, industry status, social impact, corporate growth, and estimated market value.
"In fact, for many unlisted unicorn companies in China, their profit model is still in the process of exploration, and it is not an expert institution that can quickly draw conclusions. With several quantitative and qualitative indicators to measure, the standard of one-size-fits-all is not suitable." . Some brokerage investment bankers told reporters.
According to the "Finance" reporters, the pilot will be implemented as soon as possible in June this year.
The call for a new economy has been around for a long time. After several years of research and discussion, it has gradually reached a consensus on bringing back successful companies that have been listed overseas and letting domestic investors share their corporate growth dividends.
According to Caijing, as early as 2016, after the strategic emerging board “dead”, the regulatory authorities began to prepare for the CDR feasibility for a long time, and the brewing of the CDR rules before and after the Spring Festival has already moved.
"At present, the listing standard of A-shares is still the standard set by the industrial economy era, and it has not been able to meet the needs of the new economic era. This pilot opinion is a reflection of the integration with international capital market rules. Continuous debugging in the pilot to realize China Economic industrial upgrading." Chen Datong, founder of Huashan Capital, told the Caijing reporter.
On March 20, Premier Li Keqiang said in a press conference at the Great Hall of the People that China’s economy is stable and the new momentum has played an important role. In the past, some "Internet +" companies have always gone public overseas. They have already asked relevant departments to improve the system measures for domestic listings, welcome them to return to A-shares, and at the same time create more favorable and legal requirements for the listing of "innovative entrepreneurs" in China. conditions of.
Embracing the new economy and vying for the Unicorn Company has become the fashion of many capital markets around the world in recent years. In order to attract "unicorns", in recent years, the United States, Singapore and other exchanges have tried their best.
The Hong Kong capital market, which once lost Alibaba, has been working hard to solve the pain points of new economic enterprises since 2017.
In February of this year, the Hong Kong Stock Exchange announced a series of major reforms and new policies, intending to open the IPO door for companies with different rights and the same unprofitable biotech companies. At the first Hong Kong Biotechnology Summit held by the Hong Kong Stock Exchange on March 22, Li Xiaojia, chief executive of the Hong Kong Stock Exchange, said that the listing structure will be launched as soon as the end of April and the first batch of companies will be listed in June.
An important reason why Alibaba (BABA.N) chose to go public in the US in 2014 is that its partner system does not comply with the listing rules of the HKEx “shares with the same rights”. This has also caused the HKEx to miss out on a large number of Chinese Internet companies that have risen rapidly in recent years, and has repeatedly been criticized by the market. The eye-catching performance of listed companies has become a new evidence.
In February of this year, the US Securities and Exchange Commission approved the NYSE's proposal to amend the listing process, allowing companies to go public. That is to go directly to the usual IPO and go directly to the market, neither issuing new shares nor underwriters.
On April 3 this year, Spotify, the world's largest music streaming media platform, officially listed on the New York Stock Exchange, adopting the “direct listing” model and becoming the first direct listed company in the history of the NYSE. With Spotify's successful direct listing, the New York Stock Exchange is pushing the unicorn "battle" to a climax. Analysts predict that "unicorns" such as Airbnb and Uber will consider becoming public companies in this way.
The Singapore Exchange is also not far behind. In January of this year, the chief executive of the SGX, Luo Wen, revealed at the performance conference that the company that decided to allow the two-tier voting structure was listed in Singapore. It is expected that the first company with different rights and interests will be listed in July this year.
Undoubtedly, the "unicorn" battle from around the world has also given domestic capital market pressure.
During the two sessions, Wang Jianjun, deputy of the National People's Congress and general manager of the Shenzhen Stock Exchange, said in an interview with the media that we will welcome new economic enterprises with open arms and will build the Shenzhen Stock Exchange into the home of China's new economy. Then Zhang Dongke, vice chairman of the Shanghai Stock Exchange, also said that Actively embracing the new economy is a key task of the Shanghai Stock Exchange this year. It is necessary to support the growth of a new generation of BAT companies by implementing the “New Blue Chip Action”.
On March 8, Foxconn Industrial Internet Co., Ltd.'s initial application was approved, and the 36-day meeting was a miracle. "The regulatory layer is so urgent, and it is largely due to the time taken by the Hong Kong Stock Exchange." Some investment bankers told the Caijing reporter.
At the same time as the "Opinions" was issued, the revision of the "First Way" was also put on the agenda. To tie in with the "Opinions", the CSRC deliberately revised the "Administrative Measures for the First Development" Article 26 and the "Starting Management of the Growth Enterprise Market". Article 11 of the Measures clearly stipulates that qualified enterprises that meet the conditions no longer apply the conditions for the issuance of profits and the absence of unrecovered losses.
This is a new economic enterprise that meets the new regulations and creates conditions for A-share IPOs in the case of discontinuous profits or unrecovered losses. The obstacles to the profitability of innovative companies in domestic listings were cleared.
“In the early years, limited to various policy environments, many Internet innovation companies had to go public. With the introduction of this pilot opinion, the domestic capital market's support for the new economy is unprecedented. And the customer base of many four new companies. All in China, if possible, we still recommend that companies choose to be in the domestic capital market." Some investment bankers told Caijing reporters.
Be wary of overheating
Due to the wealth effect brought about by the listing, various stakeholders have already started the unicorn competition.
According to the "Finance" reporter, many brokers are now intensively visiting the "unicorn" potential project. The layout of large brokerages is early, and it is more advantageous in terms of resources and experience. Small and medium-sized brokerages also seek breakthroughs through multiple channels. Some local governments are even more eager to join the big game of robbing the unicorn. According to media reports, Chengdu is preparing to build a island for the unicorn, covering an area of more than 1,000 acres.
Because the "Opinions" have a rigid 20 billion valuation standard. In the eyes of many insiders, this will lead many investors and companies to artificially increase the valuation index of the company in order to meet the standards. "Because you don't have to worry about the problem of picking up the man."
Under the favorable policies, the valuation of many unicorn concepts has risen sharply, and the bubble has loomed, and questions such as “cutting leeks” have also come along. Some investors told the Caijing reporter that they often received calls recently and asked if there were any projects to be picked up.
Guo Hong believes that this pilot should not be simply listed as a unicorn company. The seven major areas mentioned in the "Notice", the Internet, and other four major areas, the combination of model innovation and technological innovation, are most likely to produce unicorns, while high-end equipment manufacturing, biomedicine and other fields, large investment, long cycle, estimate Values are often difficult to reach the level of unicorns in the short term. Meeting the listing of new economic and innovative enterprises should be steadily promoted, avoiding the enthusiasm of investors and falling into an irrational circle.
According to Wang Chaoyong, chairman of Xinli International Holdings Co., Ltd., at present, the valuation of most unicorn companies in China is based on expectations for future performance growth, with great uncertainty and risks. In particular, companies that have not yet solved the profit problem, although they have been valued, have not passed the dangerous period and have not proved their value in the capital market. The opening of such companies should be cautious.
Wei Wei, chief strategist of Ping An Securities, believes that in the Chinese capital market where retail investors are the mainstay, the introduction of innovative domestic listing and listing mechanism is highly vulnerable to overheating by investors and breeding speculation in the market. If the relevant mechanism is not properly designed and the supervision is insufficient, the issuer may be given the space to issue the stock premium, which will destroy the market order and damage the interests of investors.
In addition, the market is worried that the fund-raising effect of pilot enterprises will have an impact on the liquidity of A-shares. According to the calculation of Ping An Securities, the number of shares issued by depositary receipts accounts for 5% of the number of shares issued by the company. Considering that the A-share technology stocks have a valuation premium of 2.7 times that of the US stocks, the total return of BATJ to A-shares may absorb the funds in the market. 1.0 trillion yuan. The first pilot companies are all industry leaders and are highly sought after by the market.
Wei Wei expects that during the pilot period, the number of enterprises and the scale of financing will be strictly controlled; the time and timing of the issuance of the CSRC will also be considered. People close to the regulatory level told the Caijing reporter that during the pilot promotion process, they will fully consider the market's ability to withstand and rationally arrange the rhythm of the unicorns, without worrying about the blood-sucking effect.
The return of the new economy poses a great challenge to the supervision of the regulatory authorities, whether it is the issuance review, information disclosure of listed companies, or investor protection.
Enterprises that have been listed overseas will once face the problem of remote supervision once they issue CDRs in the A-share market. Capital markets everywhere vary in terms of accounting standards, information disclosure, and the use of funds raised for distribution. According to the Caijing reporter, the regulatory authorities are already working on some differentiated rules, including information disclosure, which is expected to be launched soon.
It is worth noting that the "Opinions" have specific provisions on investor protection.
According to the "Opinions", "if the stock is issued, the current investor protection system in the country shall be implemented; the controlling shareholder, actual controller and directors and senior management personnel of the unprofitable pilot enterprise shall not reduce the stock held before the listing before the enterprise realizes the profit. ."
This also means that the current US stocks often appear, and profitable corporate executives will find it hard to appear by selling stocks to improve their lives. This aspect is a kind of protection for investors, but on the other hand it is likely to cause embarrassment for some enterprises.
In addition, the prevailing CDR concerns in the market were cross-border conversion issues, as they involved arbitrage brought about by currency free exchange and transaction price gaps. However, this was not resolved in the "Opinions", but was left to the details of the SFC.
Wang Chaoyong proposed that, just to reform the CDR pricing policy as an example, whether it can be considered to refer to the price of the overseas market in the same stock price and form a linkage mechanism with the overseas stock price during the issuance period, so that the threshold of the market value of 200 billion yuan is not included. It is also the righteousness to establish an investor protection mechanism.
In Wei Wei's view, in the short term, the issuance of listed companies in China is expected to raise the valuation premium of A-share technology stocks and growth stocks, and increase market risk appetite. However, in the long run, as the CDR model can enhance the linkage effect between the A-share market and the global capital market, coupled with the absorption effect of the red-chip stocks returning to the A-shares, the A-share technology stocks and growth stocks will be subject to valuation differentiation, and some technology stocks will be stocked. Will be under greater pressure.
Of course, the market also has voices to question, and the strong support for unicorn companies is likely to squeeze the listing of other small and medium-sized high-growth enterprises, making the domestic industry unbalanced.
"BAT has a lot of lessons for us. Building an international financial center requires a lot of companies like BAT. There is a process from becoming a unicorn to a giant." Wu Xiaoqiu, vice president of Renmin University of China and director of the Institute of Finance and Securities, recently Boao Forum for Asia said at the annual meeting, but the unicorn priority listing has indeed undermined fairness, and the regulatory authorities should consider adopting specific rules to prevent the unicorn from becoming a "poison beast."
It is a good thing to welcome the return of the new economy. However, in the specific implementation process, it is necessary to participate in the improvement of policy guidelines, strengthen intermediary responsibilities, strengthen investor education, and especially to guard against the risk of excessive speculation in order to form a positive interaction between emerging industries and capital markets.
Chinese Depository Receipt (CDR) means that listed companies outside Hong Kong (including Hong Kong, China) will hold part of the issued shares listed in the local custody bank, issued by depositary banks in China, and in the domestic A-share market. Investment certificates for listing, settlement in RMB transactions, and trading for domestic investors, thereby realizing the sale and purchase of stocks.
Emerging industry theme fund
|Fund code||Fund abbreviation||Nearly three months of earnings||Handling fee||operating|
|519698||Bank of Communications Pioneer Mix||19.28%||1.50% 0.15%||buy Account opening|
|001268||Rich country national security theme mix||17.78%||1.50% 0.15%||buy Account opening|
|001227||China Post's information industry flexible configuration mix||16.88%||1.50% 0.15%||buy Account opening|
|001071||Huaan Media Internet Mix||16.44%||1.50% 0.15%||buy Account opening|
|502056||GF Medical Index Classification||10.03%||0.50% 0.05%||buy Account opening|