Escape from domestic A-shares and seek overseas listed auto group not to return


New Year's opening of the new low-key auto industry wants to flee the domestic A-share market on January 4, 2005, the first trading day after the new year's opening. The domestic stock market on this day gave all investors an unsightly green face: after the Shanghai index easily penetrated the low of 1259, the five-year low formed on September 13, 2004, the lowest score dropped to 123.18 points. The market closed at 1242.77 points and fell to 23.72 points, a decrease of 1.87%. Leading the decline in large-cap stocks was petrochemicals, automobiles, steel, etc. Changan Automobile (000625) closed at 5.15 yuan, a decrease of 9.97%. Xu Ming, of Shenyin Wanguo Securities Research Institute believes that, theoretically, the stock index fell for three consecutive trading days, may make the stock index fell to 1024 points, the market can not afford the point. Xiao Jianjun, a researcher at Guosen Securities, believes that Changan Automobile was able to break down once again in the first trading day of the New Year in 2004 when it fell sharply in 2004, reflecting the risk of abandonment of value stocks. Steel stocks headed by Wuhan Iron and Steel and Anshan Iron & Steel dropped sharply. Reflects the institution’s short selling of value stocks. Two new policies that came into force on January 1, 2005: The new stock issuance inquiry system and the public transfer of non-tradable shares of listed companies are considered to be the source of market pessimism. An auto analyst of Kunlun Securities believes that the continued low performance of the domestic A-share market will strengthen the determination of overseas listing of a number of large auto companies such as SAIC, Dongfeng Group and China National Heavy Duty Truck. However, SAIC and Dongfeng, these state-owned large-scale automobile enterprise groups, may not be able to sail smoothly on their overseas listings. Although Dongfeng Group began planning overseas listings since early 2004, it decided to suspend the listing by the end of the year. This news has, to a certain extent, undermined the confidence of auto enterprise groups in entering overseas capital markets. However, there are exceptions, SAIC Group is accelerating the pace of overseas listing. On December 30, 2004, SAIC was set up on the stock exchange, marking a crucial step in overseas listing. Dr. Lu Guihua, an overseas listing firm at Tsinghua University, who had to go overseas for financing as soon as possible, said that an important goal of overseas listing is to finance in order to cope with the competitive pressures caused by the overall decline in the automotive sales market. Some people have calculated an account with SAIC. According to the development plan of the top 500 of SAIC, the gap in the existing fund demand has reached RMB 50 billion. If the domestic A-share market is listed as a whole, it is very difficult from a policy point of view. In the general downturn of domestic A-shares, there are positions that can withstand such large-cap stocks. Analysts are skeptical. Another reason is the consideration of time and cost. Jiang Ning, deputy general manager of Capital Operation Center of Beijing Xinhuaxin Management Consulting Co., Ltd., said that according to the regulations of the China Securities Regulatory Commission, enterprises need to take 2 to 3 years to complete the listing in the mainland, and at least one and a half years, if they are overseas IPOs. It usually takes only six months to a year. Based on time and cost considerations, companies willing to go overseas for listing are understandable. Guoxin Junan Securities auto analyst Zhang Xin said that the current sluggish domestic auto sales market is difficult to pick up in a short time. However, under the pressure of domestic and foreign competition, the auto industry urgently needs a lot of money to develop itself. In order to quickly saturate the funds available for development, most auto enterprise groups have to embark on the road to overseas listing. On December 30, 2004, Hu Maoyuan became the chairman of SAIC Motor and took the first step in the overseas IPO of SAIC Motor. Hu Maoyuan abandoned the other two solutions, because the use of the existing A-share listing of Shanghai Automotive Asset Reorganization to achieve overall listing and the introduction of other strategic investors, to diversify the way to seek overall listing, from the current perspective, The first is long time; the second is difficult. Hu Maoyuan, anxious to gain a foothold in the world’s top 500, had to choose direct overseas listing. According to the plan, SAIC will be listed in Hong Kong in mid-2005. It is reported that Deutsche Bank, Merrill Lynch and other agencies have been appointed as sponsors. They plan to raise US$2 billion in Hong Kong. If they can be listed in New York at the same time, SAIC Motor’s plan to raise US$6 billion will be successful.

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