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Regulators have embarked on the development of CDR differentiation rules. It is expected to be launched soon.

April 18, 2018 10:24
Author: Lu Ling
source: Financial Network
edit:Oriental Wealth Network

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[Supervisors have started to develop CDR differentiation rules and they are expected to be launched soon.] Companies already listed overseas will be faced with the problem of remote supervision once they issue CDRs in the A-share market. Local capital markets have differences in accounting standards, information disclosure, and the use of proceeds from issuance. According to the “Finance” reporter’s understanding, the supervisory level has been working out some of the details of the differentiation, involving information disclosure, etc. It is expected that it will be launched soon. (Financial Net)

For the return of new economic enterprises, they must be inclusive in terms of concepts and policies, but at the same time, they must be prudent in terms of supervision and system.

As the pursuit of “unicorns” in the global capital market has intensified, the capital market in Mainland China is opening its doors to new economic enterprises with unprecedented reforms.

On March 30, the General Office of the State Council forwarded the “Circular on Several Opinions on Pilot Projects for Issuing Domestic Shares or Depositary Receipts Within the Innovative Enterprise” of the China Securities Regulatory Commission (hereinafter referred to as “Opinions”). The "Opinions" cover large-scale red-chip companies that have been listed overseas as well as red-chip companies and domestic registered companies that have not yet been listed overseas. The framing provisions were implemented 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 regulatory stances in the previous period, which means that at the policy level, there has been a clear institutional arrangement for bringing new economic enterprises back to A. The roadmap for the return of innovative companies has become 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 government, the government’s report stated that “we must support the listing and financing of high-quality and innovative enterprises” and that the State Council should approve the “Opinions” and be efficient. Beyond imagination.

“The new regulations are well-oriented, clear-cut in purpose, and pilot-initiative approaches represent the innovation of regulatory concepts.” Guo Hong, chairman of Zhongguancun Bank, said in an interview with Caijing that the selection criteria for the pilot companies are better than market expectations. To be high, it is expected that there will be fewer companies that can ultimately meet the standards through layer selection. Taking into account the market's affordability, we will be more cautious in the early stages and we will first make some demonstration effects.

In Guo Hong’s view, the essence of the capital market’s embrace of the new economy is to use the “tools” of the capital market to serve the new economic enterprises, thereby promoting the upgrading of the national industry driven by innovation, and allowing A-share investors to share the development achievements of the new economic industry and enterprises. . For the return of new economic enterprises, first of all, they should be inclusive in terms of concepts and policies, but at the same time, they must be prudent in terms of supervision and system.

Careful pilot

This "opinion" clarifies the criteria for the identification of new economic companies, using high-quality new economic companies as a pilot, and systematically promoting pilot companies to access A shares. Its content is rich and reforms exceed 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 applications for listing of domestic stocks under the conditions for stock issuance and listing; domestic registered pilot companies may apply for domestic issuance of shares in China. Listing.

Correspondingly, the "Opinions" exceeded expectations in terms of setting up the conditions for the release of legal obstacles. The issue of different rights of the same shares and the VIE structure that has long plagued high-quality unicorn enterprises landing A shares has been effectively circumvented.

The Opinion clearly stipulates that the ownership structure, corporate governance, and operation specifications of red-chip companies can be applied to laws and regulations such as company law on overseas registration, and will not only accept pilot companies that have differences in voting rights and VIE structure when issuing CDRs. Moreover, when issuing stocks, special treatment mechanisms were also set up for pilot companies with VIE architecture.

In the selected target, the pilot is mainly targeted at a small number of high-tech companies that meet national strategies, 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, and biomedicine. Technology industry and strategic emerging industries, to achieve a considerable scale of innovative companies.


However, Yikai Capital believes that, given that these industries are not yet in one-to-one correspondence with the industry classification of the Securities and Futures Commission, the definition of whether a company belongs to the aforementioned industry still needs to be further refined. The detailed approach may refer to the “Guidelines on Further Implementing GEM Recommendations” promulgated by the China Securities Regulatory Commission at the time of the launch of the GEM, and clearly defined the industries that need to be supported and still need to be demonstrated.

In terms of selection criteria, the threshold for "Unicorn" is much higher than previously expected. Large-scale red-chip companies that have been listed overseas have a market capitalization of no less than 200 billion yuan; innovative companies that have not been listed overseas (including red-chip companies and domestic registered companies) have a business income of not less than 3 billion yuan in the most recent year. The valuation is not less than RMB 20 billion, or the operating income is growing rapidly. It has independent research and development, leading international technology and is in a comparative advantage position in the competition with the industry.

There are many discussions in the market for the standard of RMB 20 billion yuan valuation. Some brokerage firms believe that the valuation of unlisted companies is based on the future development of the company and the results of consultations between companies and investors. Specific details of the relevant rules have yet to be further clarified. According to the "Finance" reporter, the fund industry association may soon issue the corresponding guidance document.

According to estimates by Guan Qingyou, chief economist of the Institute of Finance, a total of seven overseas listed companies met the requirements of "large-scale red-chip companies" under pilot conditions, namely, Hong Kong-listed Tencent Holdings, 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 Enterprises List, there were only 30 companies with a valuation of more than 20 billion yuan last year, including millet, ant gold suits, Didi, and US delegations. Today's headlines, rookie network, fast hand, DJI, Union Medical, Meizu, Tongcheng tourism. Only 23 companies met the above requirements.

This is more cautious than the market had expected, and it is quite different from the list of unicorns that have been falsified by the Ministry of Science and Technology.

It is worth noting that, considering that innovative companies have the characteristics of large investment, rapid iterations, and easy subversion, the new government will adopt a pilot approach in supporting the domestic companies in the issuance and listing process.

"Pilots can avoid uncontrollable risks and prevent them from going head-first," Guo Hong told the Caijing reporter.

The real pilot companies still have to wait until the China Securities Regulatory Commission issues the details and select them through the CSRC's committee. According to the “Opinions”, the SFC will set up an industrialization advisory committee for scientific and technological innovations 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 consideration" will have 12 considerations: business model, development strategy, new product output, innovation ability, technical barriers, industry status, social influence, business growth, estimated market value and so on.

"Actually, for many unlisted unicorn enterprises in China, their profit model is still being explored, and it is not that experts can quickly make conclusions. Using several quantitative qualitative indicators to measure, a completely different standard is not appropriate." . Some brokerage investment bankers told reporters.

According to the “Finance” reporter’s understanding, the pilot may be implemented as soon as possible in June of this year.

Exchange battle

The call for a new economy has a long history. After a few years of research and discussion, it has gradually reached a consensus that companies that have successfully listed in overseas markets should be brought back as quickly as possible to allow domestic investors to share in the company's growth dividends.

According to Caijing, as early as the 2016 strategic emerging board “failure”, the supervisory layer began to study the feasibility of CDR for a long time, and the brewing of the CDR rules around the Spring Festival has been fetal.

“At present, the listing standard of A shares is still a standard formulated in the era of industrial economy and has not been able to meet the needs of the new economic era. This pilot opinion is a reflection of the rules of the international capital market. It is constantly being debugged to realize China. The industrial upgrading of the economy," said Chen Datong, founder of Huashan Capital, told Caijing.

On March 20, when Premier Li Keqiang answered a reporter’s question at the Great Hall of the People, he stated that China’s economy is stable and that the new momentum has played an important role. In the past, some “Internet+” companies always went overseas for listing. They have already asked relevant departments to improve the system of domestic listing, and they are welcome to return to A shares. At the same time, they must create more favorable and legal provisions for the listing of “innovative and entrepreneurial” enterprises in China. conditions of.

Embracing the new economy and competing for unicorns have become the fashion of many global capital markets in recent years. In order to attract the "Unicorn", in recent years, the United States, Singapore and other exchanges have resorted to one after another.

The Hong Kong capital market, which had lost Alibaba.com, has been working hard since 2017 to resolve the pain points of the listing of new economic companies.

In February of this year, the Hong Kong Stock Exchange announced a series of major reforms and plans to open IPO gates for companies with different rights of the same shares and eligible unprofitable biotech companies. At the first Hong Kong Biotechnology Summit held on March 22nd by the Hong Kong Stock Exchange, Li Xiaojia, chief executive of the Hong Kong Stock Exchange, said that the listing structure will be launched as early as the end of April and that the first batch of companies will be listed in June.

An important reason why Alibaba (BABA.N) chose to go public in the United States in 2014 was that its partner system did not meet the Hong Kong Stock Exchange's "same shares with the same rights" listing rules. This has also caused the HKEx to lose contact with a large number of Chinese Internet companies that have rapidly emerged in recent years and has repeatedly been criticized by the market. The bright results of listed companies have become new evidence.

In February of this year, the US Securities Regulatory Commission approved the NYSE’s proposal to amend the listing process to allow companies to list directly. That is, it directly goes public without bypassing the usual IPO, and neither new shares nor underwriters are issued.

On April 3 of this year, Spotify, the world’s largest music streaming platform, officially listed on the NYSE, adopting the “direct listing” model and becoming the first directly listed company in the NYSE history. With Spotify successfully listed directly, the NYSE is pushing this unicorn “battle” to a climax. Analysts predict that "unicorns" such as Airbnb and Uber will consider using this method as public companies.

Singapore Exchange is not far behind. In January of this year, SGX chief executive Luo Wen revealed at the performance announcement that it decided to allow companies with a two-tiered voting structure to list in Singapore. It is expected that the first listed company with different rights will be listed in July this year.

Undoubtedly, the "unicorn" battle from around the world has also given pressure on the domestic capital market.

During the two sessions, Wang Jianjun, deputy to 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 establish the Shenzhen Stock Exchange as the home of the new Chinese economy. Subsequently, Zhang Dongke, vice chairman of the Shanghai Stock Exchange, also stated that Actively embracing the new economy is a key task for 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, the initial application of Foxconn Industrial Internet Co., Ltd. was passed, and the speed of the 36-day meeting was a miracle. "The scrutiny of the supervisory authorities is largely due to the fact that the Hong Kong Stock Exchange has grabbed time." Some investment bankers told the "Finance" reporter.

At the same time as the "Opinions" were promulgated, amendments to the "Starting Procedures" were also put on the agenda. To tie in with the "Opinions", the Securities Regulatory Commission deliberately revised Article 26 of the "Administrative Measures for the First Time" and the "GEM Initial Management". Article 11 of the Measures clearly stipulates that innovating enterprises that meet the conditions no longer apply the relevant earnings and there are no conditions for issuing unpaid losses.

This creates a condition for the A-share IPO to meet the requirements of the new regulations for new-economy enterprises that have been discontinued or have not made up for losses. The obstacles to the profitability of innovating enterprises in the domestic issuance and listing have been eliminated.

“In the early years, due 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 many of the customers of the four new enterprises All in the country, if we can, we still recommend companies to choose in the domestic capital market." Some investment bankers told the "Financial" reporter.

Be wary of overheating

Due to the wealth effect of going public, various stakeholders have already started the unicorn competition.

According to the "Finance" reporter, many brokers are now intensively visiting the "Unicorn" potential project. Large brokers have a long-term layout, and they have an advantage in terms of resources and experience. Small and medium-sized brokers also seek breakthroughs through multiple channels. Some local governments are even more eager to join in the looting of unicorns. According to media reports, Chengdu is preparing to build an island dedicated to unicorns and covers an area of ​​more than 1,000 mu.

Due to the "Opinion" has a rigid valuation of 20 billion. In the view of many people in the industry, this will lead to many investors and companies, in order to achieve standards, artificially increase the company's valuation index, "because there is no need to worry about the problem of the adversary."

Under favorable policies, the valuations of many companies with unicorns have risen sharply, bubbles have appeared, and questions such as “cut vegetables” have come along. Investors told the "Financial" reporter that they have received telephone calls recently and asked if there are any projects that need to be delivered.

Guo Hong believes that the pilot should not be simply listed as a unicorn enterprise. In the seven major areas mentioned in the Circular, the four major areas of the Internet, such as the combination of model innovation and technological innovation, are most likely to produce unicorns, while high-end equipment manufacturing, biomedicine, and other fields have large investment and long-term evaluation. In the short term, it is often difficult to reach the unicorn level. To meet the listing of new economic and innovative enterprises should be steadily promoted, to avoid the enthusiasm of investors, into an irrational cycle.

According to Wang Chaoyong, chairman of Xinli International Holding Co., Ltd., at present, the valuation of the vast majority of domestic unicorn enterprises is based on the expectation of future growth, which has great uncertainty and risks. In particular, companies that have not yet solved the problem of profitability, although they have valued, have not experienced a dangerous period and have not proved their value in the capital market. The opening of such companies should be prudent.

Wei Wei, chief strategist at Ping An Securities, believes that in the Chinese capital market where retail investors dominate, the introduction of innovative domestic companies' internal issuance and listing mechanism is extremely vulnerable to overheated investors seeking speculation. If the relevant mechanism is not properly designed and the supervision is insufficient, the issuer may be given a premium to issue share price premiums, disrupt market order, and damage the interests of investors.

In addition, the market is concerned that the effect of the absorption of the pilot companies will have an impact on the liquidity of the A-shares. According to Ping An Securities estimates, the number of shares issued by the company is estimated to be 5% of the company's issued shares. Considering that A-share technology stocks have a valuation premium of 2.7 times that of US stocks, the return of all BATJ A-shares may involve the absorption of on-site funds. 1.0 trillion yuan. The initial pilot companies are all industry leaders and are highly sought after by the market.

Wei Wei estimated that during the pilot period, the number of companies and the scale of financing will be strictly controlled; the timing of the issuance and the rhythm of the issuance of the CSRC will also be taken into consideration. Those close to the supervisory level told the “Finance” reporter that during the pilot advancement process, the market’s affordability will be fully considered, and the rhythm of the unicorn’s listing will be rationalized, so there is no need to worry about the blood-sucking effect.

The return of the new economy poses a great challenge to the supervision of regulatory agencies. New requirements have been put forward for issues such as issuance audits, disclosure of listed companies, and investor protection.

  Companies that have been listed overseas will issue regulatory issues when they issue CDRs in the A-share market. Local capital markets have differences in accounting standards, information disclosure, and the use of proceeds from issuance. According to the “Finance” reporter’s understanding, the supervisory level has been working out some of the details of the differentiation, involving information disclosure, etc. It is expected that it will be launched soon.

It is worth noting that the "Opinions" have specific provisions for investor protection.

According to the "Opinions", "the issue of stocks, the implementation of the existing domestic investor protection system; not yet profitable pilot companies' controlling shareholders, actual controllers and directors, senior management personnel before the company achieve profitability can not reduce holdings of shares held before the listing ."

This also means that current corporate executives who have appeared frequently in the US stock market and have not made profits will be hard to emerge by selling stocks to improve their lives. This is a protection for investors on the one hand, but on the other hand it is likely to cause embarrassment for some companies.

In addition, the general concern about CDRs before the market is the cross-border conversion problem, because it involves arbitrage brought by currency convertibility and transaction price gap. However, this was not resolved in the "Opinions" but was left to the SFC's details.

Wang Chaoyong proposed that only taking the reform of the CDR pricing policy as an example, could it be considered that “prices refer to the prices of foreign shares in the same stock market and form a linkage mechanism with foreign stock prices during the issuance period”, which is not only a threshold for the market value of RMB 200 billion yuan. Differentiating the same work is also the proper meaning of establishing an investor protection mechanism.

In Wei Wei's opinion, in the short term, the incorporation of innovative companies in the domestic market is expected to boost the valuation premium of A-share technology stocks and growth stocks, and increase market risk appetite. However, in the long term, due to the CDR model can enhance the linkage effect between the A-share market and the global capital market, coupled with the red chip stocks return to the A-shares, the A-share technology stocks, growth stocks will appear valuation differentiation, some technology stock prices Will withstand greater pressure.

Of course, there are also voices in the market questioning that the intensive support for unicorn enterprises will easily squeeze other small and medium-sized high-growth companies and make the domestic industry unbalanced.

“BAT has a great lesson for us. Building an international financial center requires a lot of companies like BAT. There has been a process of turning from unicorns to giants.” Wu Xiaoqiu, vice president of the Renmin University of China and director of the Institute of Finance and Securities, was recently At the annual meeting of the Boao Forum for Asia, the unicorns' preferential listing did undermine fairness. The regulators must consider adopting specific rules to prevent the unicorns from becoming poisonous beasts.

It is a good thing to welcome the return of the new economy. However, in the specific implementation process, it is necessary to involve all parties in improving policy guidelines, strengthening intermediary responsibilities, and strengthening investor education. In particular, it is necessary to guard against the risks of over-hype, in order to form a benign interaction between emerging industries and capital markets.


The Chinese Depository Receipt (CDR) refers to the fact that listed companies overseas (including Hong Kong, China) will entrust part of the issued shares to local custodial banks and be issued by depositary banks in China and be used in the domestic A share market. Listed, traded in renminbi transactions, and investment certificates for domestic investors to buy and sell shares.

Fund codeFund abbreviationNearly three months earningsFeesoperating
519698Pioneer Blends19.28%1.50% 0.15%buy Open an account to buy
001268Rich country security theme mix17.78%1.50% 0.15%buy Open an account to buy
001227China Post Information Industry Flexible Configuration Mix16.88%1.50% 0.15%buy Open an account to buy
001071Huaan Media Internet Mix16.44%1.50% 0.15%buy Open an account to buy
502056GF Medical Index Grading10.03%0.50% 0.05%buy Open an account to buy
Data Sources:Oriental Wealth ChoiceData, Galaxy Securities, Deadline: 2018-04-17

                (Editor: DF070)

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