CSRC Investigates 'Homecoming' China Concept Stocks; Prices Tumble
Yicai Global
/SOURCE : Yicai
CSRC Investigates 'Homecoming' China Concept Stocks; Prices Tumble

(CBN - Global) May 8 -- The China Securities Regulatory Commission is conducting an in-depth analysis of 'homecoming' Chinese concept stocks, spokesperson Mr. Zhang Xiaojun said at a press conference on May 6 in response to questions regarding a possible ban on red-chip companies listed overseas returning to the Chinese stock market.

China concept stocks refer to the stock of leading mainland-based companies that have listed overseas to gain access to foreign investor capital.

"Five red-chip companies listed overseas have delisted in the past three years, and returned to the A-share market through Mergers and Acquisitions," Mr. Zhang stated. "This phenomenon has been questioned by investors, who believe that close attention should be paid to the significant price differences in the Chinese and overseas stock markets and the use of shell company resources. The CSRC is aware of the concerns among investors, and is making in-depth analyses of the potential effects of the return of these companies to the A-share market through IPOs and M&As."

Prices of Chinese concept stocks undergoing or preparing for privatization, including Qihoo 360 Technology Co. [NYSE: QIHU], YY Inc. [NASDAQ:YY], Autohome Inc. [NYSE:ATHM], Momo Inc. [NASDAQ:MOMO] and Jumei International Holding Ltd. [NYSE:JMEI], took a dive on the news. In particular, Momo closed 5.41 percent lower on May 5, with prices dropping as much as 15 percent that day.

Related A-share stocks also suffered a blow on May 6. Hedy Holding Co., the shell company of Focus Media Information Technology Co. [SHE:002027] tumbled 6.83 percent by the close of market, and Chongqing New Century Cruise Co. [SHE:002558], the shell company of Giant Interactive Group Inc., closed 3.11 percent lower.

A-shares are denominated in Chinese yuan and are traded on the Shanghai and Shenzhen stock exchanges. Only Chinese individuals and institutions can buy them.

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