In the current changing capital market, how do new economy companies choose the right place and timing for listing? How to control the pace of IPO in the “crisis” and “opportunity”? The second “Private Board of Changemakers” organized by United Futu has provided you with detailed answers.
“The capital market is always organic in danger, and danger in opportunity.” On the afternoon of March 26, at the second “Private Board of Changemakers” held jointly with Futu in Shenzhen, Futu Senior Partner Wu Biwei described the recent Hong Kong and US stock market conditions like this.
Throughout last year, we obviously saw that the overall Chinese concept stocks were very hot. The share prices of companies such as Tencent, Meituan, and Pinduoduo frequently hit record highs. New economy companies went to Hong Kong and went public in the United States. In the past month, the market has experienced a sharp correction, but the pace of overseas listing of China’s concept stocks has not stopped because of this. In the past, Tuya Smart, Zhihu, etc. IPO in the United States, and then Baidu, Bilibili, etc. returned to Hong Kong for secondary listings.
In the current turbulent times of the capital market, how do new economy companies choose the right place and timing for listing? How to control the pace of IPO in the “crisis” and “opportunity”? How to handle the relationship between the company and investment banks and other intermediaries?
At the “Private Board of Changemakers” jointly organized with Futu, Futu Senior Partner Wu Biwei, NASDAQ China Chief Representative Hao Yusheng, Hong Kong Stock Exchange Senior Vice President Zhang Xiaoxia, and Mingyuan The senior executives of Yun, Tongchuang Weiye, CICC, BYD and other companies have comprehensively analyzed the opportunities and challenges of listing companies for CXOs of 30+ new economy companies.
Hong Kong stocks are beautiful, but U.S. stocks need a correction?
On the listing process of US stocks and Hong Kong stocks, the guests mainly shared the following perspectives: the corporate structure of mainland Chinese companies when they are listed in Hong Kong, the US, and A, such as the VIE structure and red chip listing; the financing and financing of the three places The efficiency of refinancing; the similarities and differences in the listing process and review; the current popular listing methods for U.S. stocks-SPAC, IPO or direct listing; the timing of listing, the time required for the listing process of U.S. and Hong Kong stocks, and the cost of listing; U.S. and Hong Kong stocks The process of submitting the prospectus, how to manage investor relations before and after listing, etc.
Hao Yusheng, chief representative of Nasdaq China, said that despite the general background of the trade war and the introduction of the “Foreign Company Accountability Act”, the listing of Chinese concept stocks in the United States has generated certain pressures, but the whole thing The impact is limited. Listing in the United States is convenient, fast, time-controllable, and the process is transparent. In the future, it will still be the main market for mainland new economy companies to list overseas.
Han Yingjiao, senior vice president of the Hong Kong Stock Exchange, also shared remotely that the Hong Kong capital market has become the new economy of Mainland China after the 2018 listing rule reform.The company’s first choice for listing overseas, has also become a bridgehead for domestic and overseas funds to invest in China’s new economy companies.
The private board of directors reviewed several ups and downs of concept stocks in U.S. stocks in the past ten years and their reasons, and compared the risks and path preferences between SPAC, IPO and direct listing. Among them, SPAC (Special Purpose Acquisition Company), as an innovative financing method for backdoor listings, is less risky and more flexible. It is a popular way for US stocks to go public recently.
After a number of major Chinese concept stocks in 2020, the current changes in US stocks may be a rational correction of Chinese concept stocks. At the same time, the proportion of new economy companies in Hong Kong stock IPOs is increasing. In 2020, New Economy Corporation received more than 60% of the Hong Kong stock IPO financing amount. In the first two months of this year, this proportion increased by more than 90%. Statistics show that Hong Kong stocks have maintained their popularity since last year.
Taking the initiative in the listing process
As always, Futu senior partner Wu Biwei shared his observations on overseas capital markets at the private board of directors. Wu Biwei’s speech focused on two aspects: the first is how to choose the time to go public, which depends on the specific position of the company in the industry competition pattern; the second is the issues that should be paid attention to in the process of listing and pricing. He emphasized the need to plan well and take the rhythm in his own hands. In addition, he once again emphasized the importance of stock trading liquidity, thinking: “You can’t establish a connection with high-net-worth customers and retail customers. In fact, high-frequency and quantitative follow-ups will not come in.” Covering high-net-worth customers and retail customers, both of which can better maintain the activity of stock trading after listing.
Han Yufei of the Financial and Professional Liability Risk Department of Cinda Insurance shared how to conduct risk management in the US and Hong Kong stocks. Although the US stock IPO process is relatively simple, it is prone to face class action lawsuits for various reasons after listing. He also introduced in detail the class action mechanism and status of the U.S. capital market, and the strategies to deal with it in advance, including how to diversify and transfer risks.
Tai Junling, Senior Vice President of TPG, and Wu Jiayuan, Executive Vice President of TPG, pointed out in their speeches that investor relationship management is not only a post-listing matter, but also a necessary part of the listing process. They gave some detailed issues and handling methods in investor relations during and after listing, including brand image and media strategy.
Finally, the participants of this private board of directors collectively visited Shenzhen BYD Company. BYD’s board secretary and other senior executives introduced BYD’s products, track and industry to the visitors. VisitorsThis will deepen the understanding of the business model of this Hong Kong stock and A-share listed company and the electric vehicle industry-the market enthusiasm ignited by the electric vehicle industry seems to continue under the current macro environment.
In general, the guests of the current private board of directors believe that the financing of Hong Kong stocks is relatively high this year, and the US stocks are more friendly to new energy vehicles, Internet technology and cloud computing companies in terms of pricing. A-shares pay more attention to the maturity of enterprises and stable profitability. In view of the current “barrier lake” situation in the A-share review, some companies limited by their own conditions may need to consider the listing of Hong Kong and U.S. stocks. However, under the influence of the Luckin incident last year, Chinese companies going to the US need to do more risk aversion and rationally face changes in the US stock market environment. In addition, whether you are listing on US stocks or Hong Kong stocks, you must pay attention to two things. One is to master the initiative and rhythm; the other is to pay attention to strategies and maintain flexible contacts with intermediaries, investors, and the media.
Li Xin, the executive general manager of CICC, gave the reference coordinates for evaluating the three major stock markets in his speech. He said: “Enterprises can compare the three markets in these three sectors from the dimensions of reputation, valuation, investor structure, liquidity, research coverage, listing review, issuance and sales, market outlook capital operations, and time to market.”
Perhaps, this is the secret to successfully ringing the bell overseas.