"Normal Compliance" In The Stock Return Is Difficult To Define

Since the end of April this year, the market has heard rumors that the SFC will suspend the listing of shares in China.

Every time there is wind and grass, it will cause the attention of the market.

No, in September 22nd, Guo Song, director of the capital account management division of the State Administration of foreign exchange, once again touched this nerve.

Therefore, based on the fact that arbitrage is the main purpose of stock return at present, and in line with the spirit of preventing the return of arbitrage for arbitrage, it is doubtless necessary to strengthen the regulation of stock return in the current slowdown.

On the same day, Guo Song said at a policy press conference that the centralized return of stocks may have a negative impact on the image of Chinese enterprises overseas.

From the perspective of the foreign exchange bureau, we still adhere to the principle of real demand.

However, we must prevent the so-called return of arbitrage as the so-called "stock return", which will support the normal compliance of cross-border mergers and acquisitions and "stocks in China" and maintain the balance of payments in the process.

This is also the latest statement by the senior government on the issue of the return of stocks.

To this end, a lot of media reported the news on the topic of supporting the return of the "normal stock".

In May 6th this year, Zhang Xiaojun, a spokesman for the securities and Futures Commission, said that the securities and Futures Commission is conducting an analysis and study of the possible impact of the IPO stock market on the A share market.

In September 2nd this year, in response to the market rumors of "no return of 20 times earnings per share", a spokesman for the securities and Futures Commission, Deng Ge, said that there were no changes in the relevant regulations and policies for such enterprises to return to the A share market.

It can be said that, to this end, it is rather vague that the concept of "normal compliance" should be returned to the stock market.

However, if the formulation of the "normal compliance" is difficult to accurately grasp, it is known to all women and children to prevent the return of the shares in arbitrage.

And in recent years

The motive of return is almost all arbitrage.

It is no wonder that some investors said after the speech of director Guo Song, the foreign exchange bureau halted the stock return in disguise.

Although this argument is too absolute, if we really want to prevent the return of arbitrage for the purpose of stock return, then the "normal compliance" of the stock return will probably not exist.

In recent years, the main reason for the return of China's stock return is mainly two points.

The first is the high price earnings ratio of A share market.

For example, the 2015 storm technology demolished the VIE architecture and went to A shares.

Listing has not only created the myth of making up 27 consecutive trading boards, but also has a price earnings ratio of more than a thousand times.

This is a huge stimulus to the listed companies in overseas listing.

Because listed companies in overseas stock market usually have only a few times or even several times earnings.

Therefore, there is a strong impulse to return to the A share market.

This is the purpose of arbitrage in the high valuation A share market.

Two, another reason for the return of China's stock market is to avoid the severe market regulation and strict investor protection mechanism in the US stock market.

Because the United States stock market regulation of illegal behavior is very strict, punishment is also very strict.

At the same time, under the mechanism of class action, illegal companies often encounter huge claims from investors.

One of the most important reasons why some stock companies choose to return is that they can not accept the United States.

The reason for strict supervision.

So they became deserters in the US market and fled to the domestic A share market.

On the basis of these two reasons, the image of China's companies in overseas stock returns is very negative.

On the one hand, the A share market can arbitrage at a high price. On the other hand, the regulation of the A share market is much more relaxed than that of the US stock market.

In fact, almost no stock company is based on the needs of company development.

Because the stock return to privatization process, we must invest a lot of money, these funds are sufficient to support the needs of the company's development.

Moreover, from the perspective of enterprise development, China's stock return can choose the way of "retaining roots", that is to say, choose a way similar to H+A, so that the company can be listed in the US (or other foreign markets) and the domestic A share market, which is more conducive to the development of enterprises.

And root out to the domestic market, which is the maximization of arbitrage.