Log in
Log in
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     
Sign up
Or log in with
GoogleGoogle
Twitter Twitter
Facebook Facebook
Apple Apple     

CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED

(3908)
  Report
Delayed Hong Kong Stock Exchange  -  04:08 2022-10-03 am EDT
10.98 HKD   -3.85%
09/27Jinke Smart Gets $606 Million General Cash Offer From Shareholder
DJ
09/22Jenscare Scientific Anticipates Up to $30 Million in Hong Kong IPO
MT
09/22AIM Vaccine to Raise Up to $20 Million in Hong Kong IPO
MT
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisionsFunds 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

Analysis-China investors hedge U.S. delisting risk with Hong Kong play

08/10/2022 | 04:11am EDT
A floor trader walks during afternoon trading at the Hong Kong Stock Exchange in Hong Kong

SHANGHAI/HONG KONG (Reuters) - Global fund managers holding U.S.-listed Chinese stocks are steadily shifting towards their Hong Kong-traded peers, even as they remain hopeful Beijing and Washington will eventually resolve an audit dispute to keep Chinese firms on American exchanges.

The pace of migration will likely accelerate, as more Chinese firms listed in New York are expected to follow technology giant Alibaba's intent to launch so-called primary listings in Hong Kong, potentially boosting liquidity there to smooth the transition.

KraneShares CSI China Internet ETF (KWEB), a New York-listed fund focused on Chinese tech plays, started swapping American Deposit Receipts (ADRs) into Hong Kong shares in December, when U.S. securities regulators finalised rules to prohibit trading of Chinese companies not compliant with U.S. audit rules.

Under the U.S. rules, Chinese ADRs will be ejected from exchanges in early 2024 if U.S. regulators cannot have complete and timely access to the Chinese companies' audit working papers - a request so far denied by Beijing on national security grounds.

Hong Kong-traded stocks account for more than 70% of KWEB's portfolio, latest data shows, compared with just 25% in March 2021. By the end of this year, the fund aims to be fully invested in Hong Kong shares.

"It behooves both sides to resolve this issue as there's no winner in a delisting scenario," said Brendan Ahern, CIO of Krane Funds Advisors, which manages the fund.

But under fiduciary duty to protect investors' money, "you're going to take the more conservative path."

Ahern hailed Alibaba's plan to upgrade its secondary listing in Hong Kong to a primary listing, saying such a move "allows companies to have their cake and eat it too."

LIQUIDITY PRESSURE

Still, Hong Kong is a relatively small and retail-driven market compared to the U.S., and it might face pressure to offer liquidity support if delisting kicks in, said Jon Withaar, head of Asia Special Situations Equities at Pictet Asset Management.

"You have so many companies that are Chinese ADRs that will need to come back home. This is almost a trillion dollars, on top of a lot of companies in the private space looking to become public," he said.

A primary listing would allow the stock to be included in the China-Hong Kong Stock Connect, thus making stocks eligible for mainland investments and potentially increasing trading volumes, but nothing close to the depth of U.S. markets.

Equity trading turnover on the New York Stock Exchange and the Nasdaq each was roughly seven times that of the Hong Kong bourse in 2021, according to the World Federation of Exchanges.

Jon said he owns both Chinese ADRs and Hong Kong shares in his portfolio due to the delisting uncertainty.

The U.S. market offers better liquidity but trading hours in Hong Kong are easier to manage, the Singapore-based manager said.

Alibaba will likely trigger "a wave" of primary listings in the next 12 months, potentially boosting average daily turnover in those stocks by 50% once they are included in the Stock Connect, Citic Securities estimates.

PRUDENT STEP

Thomas Masi, co-portfolio manager of the GW&K Emerging Wealth Strategy, which is heavily exposed to China, has already moved holdings in companies such as Alibaba from New York to Hong Kong, but hasn't yet swapped out of ADRs in Trip.com and Yum China Holdings.

"We only have three Chinese holdings where we own the ADR ... because the liquidity is overwhelmingly concentrated in the ADR form," said Nuno Fernandes, GW&K's partner and portfolio manager, adding a shift will take place once liquidity in Hong Kong becomes sufficient.

But he still believes that the vast majority of Chinese ADRS will be maintained: "This does not have to be a zero sum game, Hong Kong or New York."

Beijing in late May said both sides are committed to reaching a resolution, but Washington has been more cautious on the outlook.

"Our base case is that authorities come to a resolution on U.S. listings and the status quo of over two decades remains," said Thomas Hayes, chairman and managing member of Great Hill Capital, a New York-based hedge fund. However, he has also shifted holdings to Hong Kong where possible.

Some fund managers say they will stick to ADRs.

"We still own Alibaba and Tencent ADRs," said Adam Coons, portfolio manager at Winthrop Capital Management.

"We still believe that it is very unlikely that China and the U.S. cannot come to a resolution and Alibaba will not get delisted. Regardless, this has become a narrative that is dragging the stock down," Coons said.

(Reporting by Samuel Shen and Xie Yu; Editing by Vidya Ranganathan & Shri Navaratnam)

By Samuel Shen and Xie Yu


© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED 0.49% 80.3499 Delayed Quote.-32.66%
CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED -3.85% 10.98 Delayed Quote.-46.88%
CITIC LIMITED -0.41% 7.37 Delayed Quote.-3.90%
CITIC SECURITIES COMPANY LIMITED 0.11% 17.42 End-of-day quote.-34.04%
MSCI SINGAPORE (GDTR) 1.29% 5346.57 Real-time Quote.-14.84%
NASDAQ COMPOSITE 2.00% 10785.63 Real-time Quote.-32.40%
PINDUODUO INC. -0.11% 62.4903 Delayed Quote.7.34%
STOXX MOROCCO TMI (EUR) -0.55% 89.84 Delayed Quote.-17.64%
TENCENT HOLDINGS LIMITED -0.98% 263.8 Delayed Quote.-41.68%
TRIP.COM GROUP LIMITED 2.94% 217 Delayed Quote.13.73%
YUM CHINA HOLDINGS, INC. 0.18% 47.435 Delayed Quote.-5.04%
All news about CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED
09/27Jinke Smart Gets $606 Million General Cash Offer From Shareholder
DJ
09/22Jenscare Scientific Anticipates Up to $30 Million in Hong Kong IPO
MT
09/22AIM Vaccine to Raise Up to $20 Million in Hong Kong IPO
MT
09/21InnoCare Completes Initial Public Offering on the STAR Market of the Shanghai Stock Exc..
AQ
09/16Far East Horizon Sells Underlying Assets to China International Capital
MT
09/16China International Capital Corporation Limited entered into an agreement to acquire Un..
CI
09/16China International Capital Corporation Limited entered into assets disposal agreement ..
CI
09/14China, Hong Kong stocks slump on bets of aggressive Fed rate hikes
RE
09/14China stocks fall as U.S. inflation fuels more aggressive rate-hike bets
RE
09/13CICC Shares Fall After Proposed Rights Issue
DJ
More news
Analyst Recommendations on CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED
More recommendations
Financials
Sales 2022 32 153 M 4 519 M 4 519 M
Net income 2022 9 507 M 1 336 M 1 336 M
Net Debt 2022 80 227 M 11 277 M 11 277 M
P/E ratio 2022 5,09x
Yield 2022 2,87%
Capitalization 120 B 16 803 M 16 803 M
EV / Sales 2022 6,21x
EV / Sales 2023 5,52x
Nbr of Employees 14 250
Free-Float 84,1%
Chart CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED
Duration : Period :
China International Capital Corporation Limited Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends CHINA INTERNATIONAL CAPITAL CORPORATION LIMITED
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 20
Last Close Price 9,95 CNY
Average target price 18,94 CNY
Spread / Average Target 90,3%
EPS Revisions
Managers and Directors
Zhao Hui Huang Chief Executive Officer & Executive Director
King Fung Wong Chief Financial Officer
Tao Gao Chairman-Supervisory Board
Ru Jun Shen Non-Executive Chairman
Long Cheng Chief Information Officer
Sector and Competitors