Tag Archives: CSRC

BUYOUTS: Privatizing Shares Tank on Talk of Homecoming Chill

Bottom line: Many privatization bids by Chinese firms hoping to re-list in China could collapse if the CSRC cracks down on backdoor listings, though de-listing plans backed by big private equity names could still succeed.

Privatizing shares tumble on CSRC rumors

Rumors that they might get a chilly reception from China’s securities regulator has sparked a major sell-off for shares of US-traded companies trying to privatize and re-list at home in search of higher valuations. The dive is one of the largest I’ve seen for any single group in quite a while, and could present a great buying opportunity for anyone who believes these companies can still successfully privatize and re-list in China.

But in this case I might be more inclined to agree with the pessimists, since China’s securities regulator is quite conservative, even though I’ve said it should continue to allow these re-listings. (previous post) In this case the China Securities Regulatory Commission (CSRC) may also be acting under direct orders from Beijing, which is already worried about another major sell-off on domestic stock exchanges like one early this year. Read Full Post…

IPOs: Better Oversight, Not Ban, Needed for China Backdoor Listings

Bottom line: The CSRC should take steps to better regulate backdoor listings by Chinese companies privatizing from New York to ensure market stability, but shouldn’t ban the process completely.

CSRC weighs closing backdoor listings

Chinese companies planning to re-list at home after disappointing results with overseas IPOs got some troublesome signals last week, when rumors emerged that China’s securities regulator might be planning to slow or halt a mechanism that has quickly become the preferred route for such homecomings.

That mechanism has seen newly privatized companies make back-door listings using Shenzhen- and Shanghai-traded firms that are often just shells of former state-run enterprises whose own businesses have withered. Returning companies have chosen such a path because conventional IPOs in China have slowed to a crawl due to the regulator’s concerns about market volatility, creating a huge waiting line for new listings. Read Full Post…

VENTURE FOCUS: Tiger Brokers Feeds on China Appetite for US Stocks

Bottom line: Tiger Brokers could see strong growth by banking on Chinese demand for US and Hong Kong stocks, but also faces some risk if Beijing decides to regulate the company as a financial firm.

Tiger eyes Chinese with appetite for US, HK stocks
Tiger Brokers eyes Chinese with appetite for US, HK stocks

I’m kicking off my new series on noteworthy venture-backed companies with the fast-growing Tiger Brokers, which is feeding off a Chinese love of stocks and growing demand for access to overseas markets. In the current climate where China’s own stock markets have become quite volatile and prone to big sell-offs, Tiger’s gateway to the US and Hong Kong stock markets could prove a potent draw to Chinese traders looking to diversify their portfolios with international stocks from more mature markets.

In a small but highly symbolic footnote to this story, Tiger is also finally giving Chinese investors access to many of China’s hottest companies that are traded overseas, including the Internet “big 3” of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700). That could ultimately provide some upside for many of those stocks over the longer term, since Chinese investors are likely to boost trading volumes for many of these homegrown companies whose shares previously languished due to lack of familiarity among western investors. Read Full Post…

China News Digest: May 7-9, 2016

The following press releases and news reports about China companies were carried on May 7-9. To view a full article or story, click on the link next to the headline.
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  • US Opens Patent Probe Against ZTE (HKEx: 763), Lenovo (HKEx: 992), 5 Others (English article)
  • China’s Latest Censorship Target: Cloud Storage (English article)
  • CSRC May Slow Domestic Re-Listings for Privatizing US-Listed China Stocks (Chinese article)
  • Tsinghua, Hewlett Packard Enterprise (NYSE: HPE) in ‘New H3C’ IT Services Venture (Chinese article)
  • Apple (Nasdaq: AAPL) China App Store Sees Malfunctions, Some Apps Disappear (Chinese article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

IPOs: IPO Ban Needs Lifting as New Activity Resumes

Bottom line: The securities regulator should start signaling it will end its latest IPO freeze as soon as current market volatility subsides to demonstrate China’s commitment to capital market liberalization.

CSRC should signal IPO ban to end soon

Reports of 2 new listing plans by Chinese companies were in the headlines last week, showing executives hope to resume their fund-raising using capital markets once the current market volatility ends. One headline saw outdoor advertising specialist Focus Media disclose a new plan to list via a backdoor offering in Shenzhen, while the other saw media report that snack giant Liwayway Holdings was taking initial steps for a $200 million IPO in Hong Kong.

Stock market fund-raising by Chinese companies has come to a standstill over the last 2 months, after a rout that began in June frightened off investors and prompted the China Securities Regulatory Commission (CSRC) to suspend all new offerings in a bid to stabilize the situation. This resumption of offering activity is still in the very early stages, and reflects the important role that financial markets play for companies in need of capital to fund their operations. Read Full Post…

IPOs: China’s IPO Freeze Misguided, Should End Quickly

Bottom line: China’s new IPO freeze to support its tumbling stock markets is ultimately a bad idea, signaling that Beijing will intervene in its financial markets to rescue irresponsible investors.

China freezes new IPOs

After several days of rumors, China’s securities regulator formally announced a temporary suspension of all IPOs over the weekend in a bid to halt a slide that has seen the main Shanghai index tumble nearly 30 percent over the past month. While such a step is understandable and may even help to calm the markets, it is ultimately misguided and should be allowed to quickly expire for a number of reasons.

A long-term freeze will hinder China’s drive to internationalize its markets, since it signifies that Beijing won’t let market forces prevail and instead will step in to rescue investors every time they spend their money irresponsibly. Such a long-term suspension would also create uncertainty for the many private firms that are some of China’s most dynamic companies, potentially cutting off a vital funding source just when they need it to fuel their rapid growth. Read Full Post…

MULTINATIONALS: SEC, Big 4 Accountants Resolve China Clash

Bottom line: The SEC’s settlement with the Big 4 over their audits for US-listed Chinese firms is a positive step for everyone, and should be followed by a broader document sharing agreement between the US and China.

SEC, Big 4 settle China dispute

After more than 3 years of bickering, the US securities regulator has finally resolved a dispute with the Big 4 accounting firms over the way they handle their audits of New York-listed Chinese firms. The sudden settlement is a welcome development not only for both sides in the dispute, but also for the dozens of US-listed Chinese companies that employ the Big 4 as their official accountants. But all that said, the US Securities and Exchange Commission (SEC) must still take one more step and sign a more comprehensive agreement with its Chinese counterpart to ensure it has access to the documents it needs when investigating New York-listed Chinese companies. Read Full Post…

IPOs: Momo Jumps In Debut, Spring Air Set To Take Off

Bottom line: Momo’s stock should continue to perform well over the next few months as investors ignore a scandal around its CEO, while Spring Airlines stock should also debut strongly later this month in its newly approved IPO.

Spring Airlines approved for Shanghai IPO

It seems investors aren’t too concerned when CEOs of their companies are accused of corporate crimes, at least based on the strong trading debut for mobile social networking app maker Momo (Nasdaq: MOMO). Frankly speaking, I’m not surprised about the strong performance for Momo, whose CEO was accused of stealing property from his former employer NetEase (Nasdaq: NTES) and using that property to start up his new company. The fact of the matter is that such dishonesty and unethical behavior is quiet common in China’s corporate sector, and thus is unlikely to result in any punishment, be it a jail sentence or even negative investor sentiment. Read Full Post…

Taiwan Fines Xiaomi, China Should Take Note

Xiaomi fined for inflating sales

Media-savvy smartphone maker Xiaomi was in the headlines for the wrong reasons last week, facing a fine and embarrassing negative publicity after being exposed for inflating its sales figures in Taiwan. The news marked the latest in a steady string of accounting scandals and other financial misreporting that have plagued overseas-listed Chinese companies for the last 3 years, undermining their credibility and casting a negative shadow on China’s own stock markets. Read Full Post…

AOL In Low-Key Return To China With “Makers”

AOL in low-key re-entry to China

Quite a lot has happened in the last 2 decades for AOL (NYSE: AOL), which went from online start-up, to Internet superstar, to global media giant and back to its current form of humble Internet player during that time. At the pinnacle of its success following its merger with Time Warner (NYSE: TWX), the company made a splash into China more than a decade ago through a highly-hyped Internet joint venture with PC giant Lenovo (HKEx: 992). That venture ultimately failed miserably, but now AOL is finally making a second move into the market through a new partnership with a local media player. Read Full Post…

China Steps Up Economic Crime Fight

China steps up fight against economic crime

China notched a major milestone in its fight against economic crime last week when it levied a record fine against a rogue securities brokerage and significantly raised the maximum penalty for trademark infringement. Both cases showed that Beijing is determined to significantly raise the penalties that companies and their employees face for economic crimes like trademark theft and insider trading. Read Full Post…