DY Sino-Swiss Connection
From the perspective of Chinese companies that have successfully landed on the Swiss Stock Exchange, although they have obtained a large amount of funds through GDR financing, GDRs generally face the problems of low trading volume and inactive trading, which is also an important reason why many companies are facing the pressure of large-scale redemption of A-share shares by GDR.
The GDR mechanism adopts a two-way conversion mechanism between GDR and A-share shares. According to the relevant regulations, there is a 120-day redemption restriction period for GDRs issued by A-share listed companies, after which investors can redeem the GDRs into A-shares and sell them in the A-share market through a cross-border conversion agency.
After the expiration of the restriction period, many enterprises experienced a large-scale redemption of A-shares by GDR. Shanshan Co., Ltd., GEM, Guoxuan Hi-Tech, Lepu Medical and many other companies have announced that the number of underlying shares corresponding to the number of GDR is less than 50% of the number approved by the CSRC. On the one hand, investment research institutions do not study Chinese companies, which leads to low investor interest in Chinese companies and inactive transactions. On the other hand, differences in trading rules and investor behavior between the A-share market and the international market will also affect the activity of trading. In addition, due to the lack of market liquidity, there is no significant room for corporate GDR to make profits, which will lead to sluggish trading.
"Listing on an overseas exchange is not a one-and-done one, and Chinese listed companies still need to spend more resources to increase their visibility among international investors in order to attract more investors. Chen Zhiheng believes that for listed companies, it is necessary to provide business information and financial data in a timely and accurate manner to enhance their own transparency and reduce the lack of investment information caused by information asymmetry. At the same time, it is necessary to actively show investors its potential growth opportunities and development prospects, so as to increase investors' enthusiasm for investment.
Enterprises issuing GDRs in Switzerland need to take the initiative to understand and adapt to the trading rules of the international market, so that the issuance products are more in line with the habits and expectations of international investors, which will help improve the trading activity of GDRs.
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