2020.01.30 CoStone Capital Views:
On November 8th in 2019, China Securities Regulatory Commission stated that it intended to revise refinancing rules such as Administrative Measures for the Issuance of Securities by Listed Companies, and Implementation Rules for the Non-public Issuance of Shares by Listed Companies, and solicit opinions from the public.
CoStone Capital Partner Chen Yanli: Private Placement Would Benefit from Policies
On November 8th in 2019, China Securities Regulatory Commission stated that it intended to revise refinancing rules such as Administrative Measures for the Issuance of Securities by Listed Companies, and Implementation Rules for the Non-public Issuance of Shares by Listed Companies, and solicit opinions from the public.
Chen Yanli, partner of CoStone Capital, believes that the private placement market will regain prosperity brought by favorable policies after undergoing great changes in the downturn. He thinks that investors should participate in private placement with the attitude of developing an industry rather than speculation so as to achieve good results and obtain high returns.
Chen Yanli argues that, from a policy perspective, the regulatory thinking on the refinancing market of listed companies has become more market-oriented, which will bring new opportunities to the private placement market. In the future, the institutional investor market is expected to formulate better rules of the game and play a more important role. In the past, the domestic refinancing market was uneven, and had problems of over-pricing and disordered pricing systems. In contrast, there are almost no discount restrictions on private placement in developed markets; and institutional arbitrage was hard there. In fact, the overall quality of the refinancing stocks is generally good, and listed companies carry out refinancing are to seek better development and make themselves bigger and stronger.
On the whole, these companies are better investment targets, which constitute an important source of excess returns in the private placement market. Therefore, after the great changes in the past few years, the private placement market will once again usher in an era of excess returns.
Rewritten by: Yang Yang, Edited by: Du Zhixin, Li Yunzhen
The year 2019 marks the fortieth anniversary of China’s Reform &Opening-Up, once again, we meet at the turning point of history. What’s the next step for the game, is there any clear guidance? The answer is affirmative.
Our country is enjoying a good momentum of development, which does not come from the Washington Consensus nor the Beijing Consensus. China’s experience has proved that both the visible hand and the invisible hand are crucial: the visible hand, stands for the government-led reform, and would yield benefits for reform and opening up; the invisible hand, stands for the Marginal Power represented by the private sector, and would improve economic efficiency and tax collection, create jobs and employment opportunities.
Provided that we want to protect and expand the benefits form reform, three simple but mandatory agreements are to be made and followed: No.1 Private ownership must be recognized, protected and treated equally with public ownership constitutionally, both ownerships are scared and inviolable;No.2 Make further clarification of the principal position of market economy, “deepen economic system reform by centering on the decisive role of the market in allocating resources”, as President Xi addressed in the third Plenary Session of the 18th CPC Central Committee;No.3 Implement the guiding principles of “comprehensively promoting law-based governance” of the fourth plenum. The rule of law is essential for economic growth, irreplaceable to protect private ownership, and necessary to encourage innovation and entrepreneurship.
Above are three rules for us to avoid falling into the Middle-income Trap. Assuming that we are breaking systematic barriers to private enterprises’ participation in market economy, and boosting innovation and entrepreneurship of our society, then we are heading towards a promoting direction. We are marching in the path of light, regardless of the ups and downs of Sino-US relationship, the drop in GDP growth rate, or the monetary policy.
These principals also apply on knowing how better to run a business: don’t be hedged by rules and regulations at the beginning, pay more attention to your survival, and you’ll learn more when you start your second business.
For many years, Huawei has been the only Chinese company on the list of the Top 50 R&D Spenders. Regardless of the economy and its income, what Huawei has been doing is investing in its future, dedicated to R&D, continuously and resolutely. This provisional work underscores Huawei’s accomplishments, making Huawei anindustry leader.
So, there are standard answers on how to run a company,which could be summarized as concentration and professional dedication, continuous investment on innovation and trying harder in R&D. Entrepreneurship is also important, every single company needs entrepreneurs to push aside all obstacles and difficulties, to implement strategies and ideas. We, as investors, are destined to look for such outstanding entrepreneurs and their companies, invest in them and partner with them.
At this key point of history, a country, a company, or asingle individual, will all need to find the right path. Four decades after the Reform and Opening-up, it’s time to learn from our experience and stop “wadding across
