China is Piloting New Reform of GEM Board
When China’s capital market opened for the 30th year, A-shares ushered in the era of registration-based IPO system. Reform and innovation requires courage, but it has never been achieved overnight. Since the establishment of securities market in 1990, the stock issuance system has undergone many reforms. In 2019, Shanghai Stock Exchange established the Star Market and started a pilot of registration-based issuance. Now the Shenzhen Growth Enterprise Market (GEM) will also pilot the registration-based system.
Since the regulatory authorities first publicly proposed reform of the GEM, it has been less than a year when the first batch of new shares are coming soon. Currently, companies to be listed are also looking forward to it. Institutional investors are enthusiastic and retail investors are full of expectations, too. It’s widely anticipated that a new wealth feast is coming. The GEM registration-based reform is a far-reaching move which plays a critically important role in the entire A-share registration reform.
China Concept Stocks Are Planning for Homecoming
In 2020, major changes in China’s capital market are taking place, and the return of China concept stocks is among them. With the continuous tightening of US regulatory policies and the reform of the Chinese market system that have created better conditions, many Chinese companies began to take actions for homecoming.
Following Alibaba’s re-listing on the Hong Kong Stock Exchange in November 2019, in June this year, two major China concept stock companies, Netease and JD.com, also landed on the Hong Kong Stock Exchange.
Some industry insiders believe that return of China concept stocks will accelerate. On the other side of the ocean, the United States has continuously strengthened its regulatory policies on China concept stocks. Industry insiders generally believe that the return of high-quality stocks will increase trading activities in China’s capital market and promote its long-term development.
New Investment Philosophy of ESG is Accepted in China
The capital market in 2020 is full of uncertainties. All investors who adhere to the long-term investment philosophy are looking for ways to develop in a market with increasing uncertainty. The concept of sustainable development has become more and more welcome for the healthy development of enterprises and the layout of asset management. Hence, ESG has become more and more popular, and its benefits will be proved by the market in 2020, bringing long-term healthy development to enterprises and long-term stable returns to investors. The ESG investment concept has successfully landed in China.
Different from the traditional ideas which put emphasis on the pursuit of financial performance, ESG advocates a business method that can bring sustainable returns in the long run. In recent years, ESG themed funds have achieved vigorous development. However, ESG still faces issues such as information disclosure and rating rules in the process of landing in China, but the concept is widely accepted, and many asset management agencies are introducing this philosophy into their investment strategies.
Liquor Companies in China Facing Pressures to Adapt to New Environment
The sudden outbreak of novel coronavirus pandemic in 2020 has created a boom in the performance of pharmaceutical and medical companies, but it also disrupted the development momentum of many other industries. The liquor industry, which had been recovering strongly, was severely affected by the epidemic. Now it is showing a new development pattern. High-end liquor companies in China have seen their sales and profits continue to increase, while the performance of some low-end liquor companies have seen a significant decline in growth.
The epidemic has put social activities into some kind of suspension, parties and gatherings are being restricted, and consumer demand has shrunk sharply, which brought greater pressure and difficulties to the sales of low-end liquor. As a result, high inventory is making it hard for many dealers to survive. Liquor makers need to adjust their business strategies as soon as possible to adapt to the new market environment.
