Interview With 30 People In China'S Capital Market In The Past 30 Years

NASDAQ is one of the most well-known overseas stock markets.

For domestic investors, this market has witnessed the capitalization and take-off of a series of Chinese enterprises, and is also the first stop for many investors to invest in securities.

The impact of the epidemic and Sino US trade frictions have brought variables to the "mature intercommunication" of capital markets between China and the United States.

In this context, the 21st century economic report interviewed Xu Guangxun, former managing director of NASDAQ Asia and chief representative of China, who was called "the first person of NASDAQ in China" by domestic media.

In 1994, NASDAQ officially came to China and began to promote it. It was at this time that Xu Guangxun joined. From 1994 to 2004, he was responsible for the expansion of the Asia Pacific region. Xu Guangxun returned to NASDAQ in March 2007. In September of the same year, China Securities Regulatory Commission officially approved the establishment of NASDAQ representative office in Beijing (the first batch). Xu Guangxun was approved to be the chief representative until May 2009.

Before joining Nasdaq, Xu Guangxun served as assistant vice president and permanent representative of London Representative Office of CITIC Ka Wah Bank.

At present, the "old investment bank" is still active in the Asia Pacific region and the front line of the international capital market.

30 years of capital exchange between China and the United States

21st century: you have been in charge of China and Asia Pacific Business in Nasdaq for 12 years. Could you tell us the story of NASDAQ's early visit to China?

I'm very glad to see that the Nasdaq market in China has finally been recognized.

In the operation of overseas listing and financing of Chinese companies, Nasdaq stock market is one of the main markets, carrying out various capital operation activities. In the number of foreign companies listed on Nasdaq, the number of Chinese companies eventually surpassed that of Israel, becoming the new number one.

However, NASDAQ in China today, is not plain sailing, also experienced as long as six years fruitless period.

NASDAQ entered China in March 1994 to publicize and promote the new stock exchange based on electronic trading. At that time, in order to enhance the popularity of NASDAQ and attract Chinese companies to be listed on NASDAQ as soon as possible, the National Securities Association even decided to set the place of the board meeting of NASDAQ in 1994 in Shanghai, China. The scale of the meeting was very spectacular. In 1995, officials at all levels of NASDAQ visited Beijing and other related cities eight times. However, it was not until the beginning of 2000 that the first Chinese company listed on NASDAQ.

In other words, the propaganda work lasted six years. Even in the face of no results at that time, the decision-making level of NASDAQ insisted on the initial strategic decision-making, supported and encouraged the executive staff to continue their efforts to develop the Chinese market, and guaranteed to provide the necessary logistics services for this purpose. And the executive staff also unswervingly carry out the strategy, thus laying a solid foundation.

China Securities Regulatory Commission (CSRC) has been honored to give valuable advice to China Securities Regulatory Commission (CSRC) in the process of its promotion, especially the valuable guidance given by China Securities Regulatory Commission.

These instructions and help make Nasdaq's efforts in China more smoothly, quickly and effectively. Looking back, I feel very kind and grateful.

The 21st century: which enterprises have been served and what unforgettable stories have been recorded?

Xu Guangxun: the main task of the representative office is to provide necessary services and information to relevant companies and institutions. These include: arrangement of entry visa related matters; introduction of investment banks, lawyers, auditors, depository banks and other intermediaries to the company; introduction and explanation of NASDAQ listing requirements and related matters; introduction and explanation of matters related to the macro level of the United States; contact and arrangement of activities in the United States.

During my tenure, I had the honor to witness more than 70 Chinese companies listing on NASDAQ. Among them, I remember that six companies were promoted to the stock market, and I personally participated in and helped to deal with specific related matters.

During this period, of course, there were many interesting stories and many unforgettable things. In the first six years, there was no performance and there was great resistance. It is difficult to start a business, so we must have perseverance.

What excited me for a while was that Baidu was selected as a constituent stock of the "Nasdaq 100" index in 2007. At that time, no company from Asian countries listed on Nasdaq was selected, while Baidu, which was listed less than three years ago, became a dazzling star stock and a constituent stock of the "Nasdaq 100" index. So, I was very proud and really excited for a while.

The Nasdaq 100 index is composed of the largest U.S. companies and non-financial foreign companies with 100 listed companies on NASDAQ. It is based on its market value. Baidu was selected in less than three years after it was listed on Nasdaq, which is a great achievement. Baidu in addition to doing a good job in the operation of fundamentals, but also very successful in the operation of investor relations. Baidu's success is also closely related to investors. This is exactly what many Chinese listed companies need to strengthen.

21st century: from the perspective of 30 years, what do you think of the development of capital exchange between China and the United States in the past 30 years?

Xu Guangxun: since the 1990s, under the guidance and approval of the government, Chinese companies have begun to go abroad to overseas markets. It was in 1994 that Chinese companies entered the U.S. stock market.

Since then, the speed and scale of capital exchange between China and the United States have far exceeded people's expectations. The scale and situation of development can be said to be very successful and gratifying. As we all know, the differences between China and the United States in laws and regulations, accounting and auditing, corporate governance, and market foundation are quite large, and both feel that they are irreconcilable. However, even in the case of a very large macro gap between China and the United States, it is gratifying that we have been able to carry out cooperation in the capital market for such a long time without stopping and have achieved mutual benefits.

However, from a quantitative point of view, the degree of development is not enough. As the largest capital market in the world, the amount of idle capital pool in the United States amounts to several trillion dollars. The purpose of setting up insurance funds in the United States is different from that of other insurance companies in the United States.

These are ideal sources of foreign capital for Chinese companies. The "unexpected amount of investment in China by small companies in the United States". This can be said to be a very gratifying but also a pity aspect of the capital exchange between China and the United States in the past 30 years. Of course, the small scale in the past has actually left unlimited development potential for future development.

How can China's stock market release its potential?

21st century: the NASDAQ index has broken through 10000 again. What do you think?

Xu Guangxun: in the US stock market on June 10, 2020, although the United States has also been seriously affected by the new coronavirus, one of its main markets, the Nasdaq stock market, once again showed its unique resilience and adaptability. The day to day trading of the Nasdaq composite index soared to 10086.89 and closed at 10023.35.

This is the latest height since its establishment in 1971, and it is also the latest height created in the shortest time.

During this period, NASDAQ also experienced the collapse of network economy in 2001 and witnessed the global financial crisis in 2008. But the new record also reminds people of its glory and disgrace.

On September 21, 2001, under the influence of the collapse of the network economy and the "9 / 11" terrorist incident, the Nasdaq composite index plummeted to close at 1423.

After about 20 years, the Nasdaq composite index once again played its unique resilience and adaptability, and once again created a new maximum, breaking through the psychological limit of 10000 points. This also explains why Chinese companies continue to choose the Nasdaq stock market for financing in recent years, and why there are still 165 Chinese companies listed on the Nasdaq stock market after several difficult twists and turns.

21st century: with the opening of the science and technology innovation board and the implementation of the registration system in the gem, the direct financing function of China's capital market has been continuously improved. From your perspective, what is the future of China's capital market reform and development?

Xu Guangxun: since the establishment of Shanghai and Shenzhen stock exchanges in 1990, China's capital market has made remarkable achievements.

The reason for this is: first, from the perspective of the operation of the secondary market, there has been no chaos or major mistakes; second, from the function of the primary market, it has been able to ensure the financing function of the market since its opening.

At present, China's GDP is the second in the world, but China's capital market is far from reaching the corresponding volume. This is a question worth pondering, and also the focus of China's capital market in the future, because China still has great market potential.

Of course, the steady development of China's economy in the future is the premise and guarantee for China's capital market to realize its potential. Even under this premise, if we want to develop smoothly, we also need the development of some basic elements. As I said earlier, China's capital market does not reflect the world's second largest volume. The reason is that some basic elements are not in place.

The capital market is always driven by fundamentals, and the institutions that participate in the market will stabilize and develop forward.

For example, there are more than 5000 qualified investment banks in the United States that participate in the operation of their primary and secondary markets. So it's not only stable but also very active. In contrast, as far as I know, there are less than 150 investment banks in China. After nearly 20 years, the number of investment banks in China has not changed since 2002. Compared with the current situation of the market, this figure is obviously out of proportion. It's also one of the reasons for the lack of quantity. Of course, this is a part of the macro. The government should lead and create the corresponding macro environment, and the government should formulate and implement the macro framework.

At present, there is a lack of relevant management talents in China. In addition, since the reform and opening up, China is facing numerous unprecedented new situations, so it is necessary to have relevant management talents.

I think there is no lack of relevant laws and regulations in China. However, part of the implementation is poor, which can not play a real sense of deterrence. This will directly affect investors' psychology and views on the capital market. Corporate governance and investor relations also directly affect the transparency and integrity of the market.

Therefore, the Chinese market needs to pay close attention to the cultivation of relevant management personnel. At the same time, we should strengthen supervision and management in this respect. It is only a matter of time before the future of China's capital market will undoubtedly surpass that of today. If the problems of relevant market elements are solved, the speed will be faster.

The influence of trade friction on China capital stock

21st century: the current trade friction between China and the United States has also affected the listing of Chinese enterprises in the United States. Do you have any concern about this?

Xu Guangxun: I have made statistics. In a few short years from 2017 to 2019, as many as 130 Chinese companies that have been listed in the United States have either successfully delisted or announced to proceed with privatization.

Since 2016, Sino US relations have been affected by the intensification of trade friction, and Chinese export-oriented enterprises have been seriously disturbed and affected. In terms of capital market operation, many companies that plan to go to the United States to list for financing have cancelled or postponed their original plans. The market is worried that the Sino US trade war will bring adverse effects to the companies still preparing to go to the United States for listing and financing, and will have negative effects on the listed China capital stocks.

21st century: will the current Sino US relations have an impact on China capital stocks?

Xu Guangxun: I think it has influence and no influence. It seems to be very contradictory, but there are two aspects of the matter.

Let's start with no impact. So far, there has been no ban on listing in the United States.

During my tenure from 1994 to 2009, I also encountered several frictions between China and the United States, but none of them affected Chinese companies' going to the United States for listing and financing. Although the proportion of Chinese assets in the U.S. capital market portfolio is small or even small, the attractiveness of Chinese assets is still the same as that of the previous year, which still meets the taste and requirements of the US portfolio.

When it comes to the impact, the length and depth of listing applications in the primary market have been significantly lengthened and deepened. For example, in the past, the review time of the US Securities Regulatory Commission was generally within three months, but now at least three months, the questions asked are more detailed. The examination of the authenticity of the financial figures of the application company, the requirements for the corporate governance structure, including the requirements for the independence of independent directors, are more detailed, longer and broader.

Secondly, the amount of funds raised in the primary market has also changed. In the past, it was possible to directly raise enough funds, but now it depends on the specific situation.

At the second level, it is also affected by the market. It is profitable in China, but the market price is not reflected. At the same time, if the price is realized, it will take longer than the domestic companies in the United States.

For Chinese companies, these changes mean an increase in costs in addition to time consumption.

The choice of going public from the perspective of old investment banks

21st century: many Chinese capital stock companies are starting privatization, especially listing in Hong Kong. Will it become a trend?

Xu Guangxun: most of the Chinese companies withdrawing from the U.S. market continue to need new listing locations in order to continue financing to support the development and operation of the companies.

In my humble opinion, there will not be a trend for China capital stocks to go to Hong Kong. One of the reasons is that the withdrawal of China capital stock from the United States, first of all, is the opportunistic exit caused by external factors, which is not the original intention. If Sino US relations get better, there will be a possibility of backflow.

The second reason is that the Nasdaq market has multiple flexible advantages. Third, the market structure, including the listing standards of the primary market and the capacity and activity of the secondary market, will also affect the attitude of Chinese enterprises to the listed market.

21st century: what kind of company is suitable for Hong Kong and what kind of company is suitable for going to the United States?

Xu Guangxun: These are actually two problems.

Comparatively speaking, the attraction or strength of Hong Kong to mainland Chinese companies should be that their language and culture are the same as those of mainland China; they are geographically close, convenient and cost-effective. None of these companies are attractive to China. Secondly, Hong Kong is one of the top ten stock exchanges in the world, with first-class capacity and popularity, and has a sound primary and secondary market mechanism.

In addition to being the world's largest capital market, the attractiveness of the US market to Chinese companies lies in the certainty of listing time, the possibility and convenience of secondary financing, more flexible listing standards and requirements, and the depth and breadth of the secondary market.

As for which companies are suitable for where to go. One of them is common to mainland Chinese companies. From the perspective of Hong Kong Stock Exchange and stock exchange, it is the same thing to prepare for listing in Hong Kong and Hong Kong stock exchange, that is to say, from the perspective of Hong Kong Stock Exchange and stock exchange, it is the same thing to prepare for listing in Hong Kong and Hong Kong Stock Exchange.

There are no language and cultural barriers to Hong Kong, so all China capital stocks can first consider Hong Kong. As for the listing requirements of Hong Kong, the overall cost, the price and total amount of fund-raising, and the specific time, we should deal with specific problems.

To go to the United States for listing, first of all, the language and culture as well as laws and regulations are not the same. So there must be international, foreign language and American financial practices in the team. After going to the United States for listing, the cost of maintaining investor relations, including investor relations, is also more prominent than that of Hong Kong listing. Therefore, we must have a clear understanding and understanding in advance.

Both Hong Kong and the United States belong to the world's first-class markets with high reputation. They both have perfect financing functions and trading systems, and both have sound corporate governance requirements and regulatory systems. The rest is that the listing requirements and standards of different places are different, the costs and the scope of intermediary agencies involved are different, and the services and products provided after listing are also different.

So where to go public depends on what the specific company needs. In a sense, beauty is in the eye of the beholder.

21st century: what suggestions do you have for enterprises to go public in the United States?

Xu Guangxun: in recent years, Sino US relations have been in ups and downs. Fortunately, this relationship has not fundamentally affected the listing and financing of China capital stock in the United States. At the same time, I also believe that this situation will not last for a long time. Because in the cross-border or non-border economic and trade activities that have been formed at present, they are deeply interdependent, and no one can do without whom.

With the acceleration of China's reform and opening up, the role of capital is more prominent and more important. These situations make it more necessary and more urgent for Chinese companies to use the overseas market to solve their own capital needs, and it is also a more economic source of funds and solutions.

Under this premise, choosing the U.S. capital market for listing financing is not only a good way to solve the near thirst.

At present, it is necessary to learn from the experience of overseas listed companies in financing. To this end, it is necessary to form a good team in advance, straighten out the accounts, tell a good story, and take it easy. At the same time, from the macro level, we should vigorously support Chinese companies to go overseas for listing and financing, further improve and relax the relevant supervision and requirements, so as to smoothly carry out overseas listing and financing.