China Capital Stock Returns To The Trend, Science And Technology Innovation Board Promotes The Internationalization Of Enterprises

Under the impact of the epidemic in 2020, the online education industry will usher in a window period of development, and the top enterprises will be crazily pursued by the capital. However, as early as June 16 this year, Morgan Stanley has downgraded the whole China's after-school counseling sector, so far, the teaching and training industry has been in turmoil.

On July 24, the general office of the CPC Central Committee and the general office of the State Council printed and issued the opinions on further reducing the burden of students' homework and off campus training in the stage of compulsory education, and the "double reduction" policy was finally implemented. Under the influence of this, New Oriental, tal, gaotu and other education related stocks have plummeted, and most companies have dropped about 90% compared with the year's high.

The sharp fall in education stocks soon spread to the whole China concept stock plate. Since this year, China concept shares have been suppressed by multiple rounds of policies. Whether it is the rectification of the teaching and training industry or the Internet anti-monopoly, it has led to the overall weakness of China concept shares. As of July 25, among the 286 Chinese stocks listed in the United States this year, the average increase was only 1.61%, and the overall median was down 17.69%, according to data from securities companies in China.

According to the data, in the first half of this year, 35 Chinese enterprises went to the United States for listing, with a year-on-year increase of 119%, a record high, with retail, consumer goods, services and information technology as the main force. The total amount of financing was 12.3 billion US dollars, with a year-on-year increase of 373%.

"Warming up" or "returning"

Late in the night of July 28, Xinhua News Agency issued an article pointing out that both platform economy and off campus training institutions are important measures to promote the healthy development of industry standards, maintain network data security and protect the people's livelihood, not to restrict and suppress related industries, but to facilitate the long-term economic and social development. As soon as this news comes out, including the education stocks, the Chinese capital stocks ushered in a sharp rebound.

However, on the evening of July 30, the chairman of the US Securities Regulatory Commission (CSRC) issued a statement saying that the CSRC must ensure that Chinese enterprises listed in the United States can apply for listing in the United States under the condition of "obtaining the permission of the Chinese government".

As early as July 6, China issued the opinions on strictly cracking down on illegal securities activities in accordance with the law, emphasizing the strengthening of cross-border regulatory cooperation, strengthening the supervision of China capital stocks, and establishing and improving the extraterritorial application system of capital market laws. Ni Jun, the audit partner of Grant Thornton, told the 21st century economic report: "the increasingly standardized capital market in terms of system and legal system is beneficial to high-quality enterprises. With the help of professional service institutions such as accounting firms, these high-quality enterprises can move to the capital market faster." But it also brings some challenges to some companies listed in the United States.

On the other hand, the return of China capital stock has become a new trend. In addition, Wu Ying, audit partner of Grant Thornton, believes that not only from the perspective of Sino US relations, but also from the perspective of economic development trends, the return of China capital stocks, including small and medium market value, is a trend. After the epidemic, the economic prosperity is moving closer to Asia and China, which will inevitably affect people's decision on capital market choice. Relatively speaking, for investors in China, including those in Asia, the resources are more abundant and more favorable. Some Chinese stocks have performed well in the Hong Kong market, which is also a big reason. At the same time, after years of development, investors have a more comprehensive understanding of the business model of Chinese enterprises, and the return of China capital stock will be a relatively long-term trend.

In the first half of this year, a shares and Hong Kong stocks were listed actively. According to relevant statistics, 245 companies landed on a shares in the first half of the year, with a total net fundraising of 192.721 billion yuan, up 44.8% from 133.089 billion yuan in the same period of last year. 44 Chinese companies were listed in the Hong Kong stock market, with a total net fundraising of 152.202 billion yuan, up 116.1% from 70.431 billion yuan in the same period last year. Under the favorable policies, several Chinese capital stocks, including Ctrip group, baidu group and BiliBili Bili, have been listed in Hong Kong for the second time, bringing new market capacity to Hong Kong.

According to Ni Jun's further analysis, there is certain uncertainty in going public in the United States. If these Chinese capital stocks want to return, they need to refer to China's regulatory rules in the process of planning, and make appropriate regulatory adjustments. This will better adapt to the regulatory requirements of the mainland of China or Hong Kong, quickly switch to the domestic regulatory environment, and accelerate the progress of the return.

"Afterwave" in capital market

Whether Chinese enterprises go to the U.S. for listing, or the return of China capital stock, are all part of China's financial internationalization exploration. China capital stock's run-off in the U.S. market can not hide the capital market's confidence in China's long-term economic development.

With the continuous promotion of the "14th five year plan" strategy and favorable policies, the IPO market is expected to remain active in the second half of the year. It is worth mentioning that at present, new energy, energy conservation and emission reduction, and resource recycling technologies related to carbon peaking, carbon neutral and "double carbon" have attracted the attention of capital. According to the forecast data of PWC, carbon neutrality will become an important driving force to promote the sustainable development of China's economy in the next 40 years, which is expected to contribute more than 2% to the annual GDP growth.

The capital market is never short of outlets, and the construction of policies and platforms is also crucial. The successful test of registration system in the science and technology innovation board has provided strong support for the financing and transformation of the real economy. On July 15, the opinions of the CPC Central Committee and the State Council on supporting the high-level reform and opening up of Pudong New Area to build a leading area of socialist modernization construction "was released, proposing that qualified foreign institutional investors should be allowed to use RMB to participate in the stock issuance and trading of the science and technology innovation board, and the market making system should be introduced into the science and technology innovation board. Ni Jun believes that this will greatly help the internationalization of RMB. At the same time, overseas investment institutions through RMB transactions will also bring liquidity to the science and technology innovation board, and enhance the attractiveness and liquidity of overseas investors to the science and technology innovation board.

The science and technology innovation board is dominated by manufacturing enterprises with the attribute of "hard science and technology". As a new favorite of the capital market, a total of 86 companies landed on the board in the first half of the year, up 87% year-on-year, with a total financing of 70.8 billion yuan, up 39% year-on-year. Ni Jun further explained that at present, the price earnings ratio of the science and technology innovation board and the growth enterprise market is generally higher than that of the main board. Due to the different plate mechanism settings, when the P / E ratio is high, the funds raised will be relatively high. In the first half of the year, there were 85 IPOs, up 203.57% year-on-year, and the total amount of funds raised was 52.729 billion yuan, up 234% year-on-year. From this point of view, in the first half of this year, the number of IPOs and the amount of funds raised on the science and technology innovation board and the growth enterprise market increased significantly year on year, which has little to do with the pilot registration system.

The introduction of the science and technology innovation board and the implementation of the registration system will inevitably bring about changes in the concept of supervision. Last year, in accordance with the basic positioning of comprehensively implementing the registration system in the new securities law, the pilot registration system of the science and technology innovation board has been implemented smoothly, and relevant enterprises, accounting firms and other intermediary organizations have transformed to cope with the situation. The continuous improvement of the capital market system may affect the number of Listed Companies in the short term, but in the long run, it will help to improve the quality of listed companies, promote the high-quality development of capital market, and bring more development opportunities for professional service institutions. Ni Jun said that from the perspective of scale and industry, the traditional audit methods can not keep up with the current situation, and we need to use digital tools to jointly cope with the digital challenges of enterprises. In the international wave, digital transformation has become the only way for enterprise development.

In this regard, Wu Ying added that, in fact, with the further deepening of the reform of the securities law, not only for digitization, but also for all intermediary agencies, forcing them to further reform themselves. In addition, in recent years, new formats, including new business models, have posed great challenges to third-party service organizations. From the perspective of accounting firms, it is more of a personnel intensive industry, and I believe that it will change to a technology intensive industry in the future.