This article is from: Interface News , reporter: Ma Xiaotian, Keda, Miao Yiwei, the picture from: Visual China

A butterfly in the Amazon rainforest gently flapped its wings, triggering a tornado in Texas. The famous “butterfly effect” has recently been reflected in Ruixing Coffee. The financial fraud of this Chinese coffee startup is bringing multiple responses.

After Rui Xing, Lucky Future also exposed itself to fraudulent behavior, and it was successively issued short-selling reports by overseas institutions with the Chinese stocks who learned and iQiyi. In addition, the US stock market has recently heard heavy news such as the Nasdaq tightening the listing rules and the US Senate passing the “Foreign Companies Liability Act.”

The above changes have given the Chinese company a chance to re-examine itself. The news that Baidu, NetEase, and other Internet giants went to Hong Kong for a secondary listing began to spread. At the same time, the innovation of the A-share market and the lure of high valuations are also throwing “olive branches” to these companies.

It ’s both danger and opportunity. The current Chinese stocks are collectively standing at the crossroads.

Reappearance of short “hunting”?

On May 19, Ruixing issued an announcement saying that it received a notice from the Nasdaq Exchange to delist it. Since the resumption of trading on May 20, the company’s stock price has plummeted for three consecutive days. As of May 22, it has fallen 68%. The market value is only $ 350 million, which is a decrease from the highest market value of $ 12 billion at the beginning of the year.Water 97%.

On January 31 this year, (Muddy Waters) released the short report on Ruixing Coffee In the third quarter, the operating profit and sales volume of stores were greatly exaggerated. Two months later, Ruixing admitted to financial fraud and the market was in an uproar.

After this, the Chinese star stock company took turns short-snapping. Whoever learns from it, iQiyi, etc. have been issued short-selling reports by overseas institutions, so that in the future, they will also be exposed to fraud after being shorted.

This year has been made a list of air stocks, interface news combing

“The fraud incident of Ruixing Coffee has greatly reduced the confidence of US investors in Chinese stocks, which has greatly affected the listing of Chinese stocks in the United States.” Wu Biwei, CEO of Futu Securities, a US-listed company, told the interface news The reporter said.

Yang Lingxiu, chief strategist of CITIC Securities, believes that China Prospective Shares has fallen into a crisis of trust, and the short “hunting” of China Prospective Shares from 2010 to 2011 may be repeated.

After the financial crisis in 2008, some foreign institutions noticed that the performance of many “Chinese stocks” was amazing, and they made amazing gains in the sluggish US market. Immediately, a survey of “Chinese stocks” began to appear and was quickly obtained. Progress.

A survey company found on the scene that China Express Media claims to lay out advertising screens for all airports in China, which are only mobile TVs installed on buses at some airports. The tax records viewed by the local tax department have been 0 for 10 consecutive years.

Starting in 2010, short selling tide for “Chinese stocks” began to emerge. whenFounded in July of 2015, founder Carson Brock had previous work experience in China, and witnessed fraudulent behavior in the backdoor of “China Prospectus”. Only one institution in Muddy Water has short-solded 7 “Chinese stocks” from 2010 to 2011, all of which were successful.

Finally, the financial fraud scandal triggered the US Securities and Exchange Commission to investigate hundreds of Chinese stocks.

According to statistics, from mid-2010 to 2011, there were 42 Chinese stock companies that were suspended from trading, of which 28 were ordered to delist, 6 took the initiative to complete the privatization, and 1 was bankrupt. And delisted. Under this influence, a total of 41 Chinese-funded companies went public in the United States in 2010, but by 2012 it had suddenly dropped to three.

“Compared with the condition that the A-share main board listing requires three consecutive years of profitability, overseas listing is relatively easy to raise funds, so there are indeed some companies that may be financially fraudulent.” Yang Lingxiu said that the US stock listing adopts a registration system with a relatively low threshold. Securities institutions in the United States only review the authenticity and reliability of the information disclosed by the company. When in doubt, they will require the company to elaborate on the relevant issues.

Especially in 2000, Sina, NetEase and Sohu successively landed on Nasdaq, which opened the subsequent wave of listing of Chinese stocks in the United States from 2006 to 2009 and 2010 to 2011. The dividend brought by the halo of US stocks in the stock market has also attracted a group of indiscriminate players, which has made short-selling institutions begin to tap the weakness of the stock market in China.

Mobile Internet began to rise around 2013, and new business formats have been continuously extended in China. The Chinese stock market has also recovered from the downturn, starting a new round of listing tide and continuing to this day. This wave of listings of leading Chinese Internet companies Inspur has pushed the Chinese stock market to new heights. At the same time, short-selling and hunting are also going hand in hand, which makes the Chinese stock market encounter a new round of trust crisis.

Tightening supervision

While the crisis of confidence is sweeping again, supervision is showing signs of tightening.

Nasdaq recently submitted a proposal to the SEC to revise the listing rules. Judging from the materials disclosed on the official website, the rule modification mainly includes three points:

  • First, it is recommended to impose additional and stricter guidelines on the quality and qualification of audit institutions;

  • Second, it is recommended to implement additional initial listing standards for companies operating in jurisdictions that restrict laws or regulations that restrict access to information by US regulators;

  • The third is to suggest new requirements for management qualifications for certain companies.

    The Nasdaq requires that the minimum fund-raising amount of a company to be listed in a restricted market be 25 million US dollars, or that the minimum fund-raising amount reaches one quarter of the company ’s market value after the issuance, whichever is lower Shall prevail.

    On May 20th local time, the US Senate passed the Foreign Corporations Responsibility Act. It stipulates that any foreign company that fails to comply with PCAOB’s audit requirements for three consecutive years will prohibit the company’s securities from being listed on the American Stock Exchange and also require listed companies to disclose whether they are owned or controlled by foreign governments.

    “At present, most of the Chinese stocks listed on the US stock market should be said that most of them belong to small and medium-sized private enterprises, and it should not be a problem. Of course, if the accounting firm that provides them with audit reports is in China If it does, it may be subject to the annual triennial or annual inspection of the Accounting Supervision Committee of the US listed company, which may be a little more troublesome.

    In Dong Dengxin’s view, the introduction of this bill will increase the difficulty of listing Chinese stocks in the United States, and will also increase the cost and risk of listing Chinese stocks in the United States.

    On April 27, the relevant person in charge of the China Securities Regulatory Commission revealed that under the framework of international regulatory cooperation, the US Securities Regulatory Commission and the US Public Company Accounting Supervision Committee have been submitted to the (PCAOB) provided a total of 14 overseas listed companies related audit work papers.

    Collective return to the general trend?

    After the Ruixing Coffee incident, the rumors in the Chinese stock market have also caused the rumor of the collective return of Internet giants such as and Baidu.

    According to the Hong Kong Economic Daily, NetEase has planned to launch a Hong Kong IPO in June, raising 1 billion to 2 billion US dollars. According to Hong Kong media reports, secretly applied for listing in Hong Kong and is expected to launch the IPO on June 5 or June 8. It is expected to be listed on June 18 with a fund raising of approximately US $ 3 billion. Earlier, foreign media reported that Baidu might consider delisting from Nasdaq.

    Although the parties chose not to comment, no one can deny that the current situation requires alternatives.

    On May 21, Li Yanhong, the founder of Baidu, said, “We are indeed very concerned about the continuous tightening of the control of the Chinese stock company in the United States. We are also constantly discussing what can be done internally. These things include, of course Second listing in Hong Kong and other places. “

    “In the future, Chinese stocks will be more and more listed in Hong Kong and less and less listed in the United States, which is an advantage for the Hong Kong market.”

    Wu Biwei, CEO of Futu Securities, said that in the current situation, it will be very difficult to list in the United States, valuation will also be affected to a certain extent, and investors will also have various doubts. Listed in Hong Kong.

    Another intermediary person in charge of going public in the United States also told the interface reporter that their customers who originally planned to go public in the United States are currently on the sidelines, and some are also considering going public in Hong Kong.

    “Centralized return of Chinese stocks is already a trend.” Director of Qingtong Capital