① How large is the scale of Chinese concept stocks held by USA investors? ② Which Chinese concept stock companies have not yet returned?
Recently, President Trump of the USA announced an unexpectedly large "reciprocal tariff" plan. The global market immediately entered a risk-off mode, resulting in a "triple kill" for US stocks, US bonds, and the dollar.$Hang Seng Index (800000.HK)$At one point, the single-day decline reached the largest level in nearly 25 years. However, China not only responded to the tariffs but also provided support to the domestic financial market.
Although the market may gradually become "desensitized" to the tariff rate numbers in the short term, threats or confrontations from the USA in other areas besides tariffs are also emerging. Recently, U.S. Treasury Secretary Mnuchin threatened that the possibility of delisting Chinese company stocks from U.S. exchanges could not be ruled out.
Only a few large Chinese concept stocks have not yet "returned home."
In fact, friction between China and the USA regarding the listing and audit papers of Chinese concept stocks has existed for some time. At the end of 2020, former U.S. President Trump officially signed the "Holding Foreign Companies Accountable Act," and at the end of 2021, the U.S. SEC further issued implementation rules based on this act. In March 2022, the SEC included the first batch of five Chinese companies in the "preliminary identification list" under this regulation, marking the formal transition of U.S. regulatory oversight of Chinese concept stocks from institutional development to the execution stage.
After experiencing the "delisting storm" of Chinese concept stocks in recent years, especially in 2022, to prevent unexpected risks, the vast majority of Chinese concept stocks, particularly large companies (such as$Alibaba (BABA.US)$、 $JD.com (JD.US)$ 、$Baidu (BIDU.US)$These have all returned to the Hong Kong stock market through methods such as "secondary listing" or "dual primary listing."
China International Capital Corporation pointed out that among the 34 companies listed in Hong Kong, the circulating Market Cap in the USA is about 1.4 trillion Hong Kong dollars, accounting for 45%: 12 of them are "secondary listings," such as $JD-SW (09618.HK)$ 、$NTES-S (09999.HK)$、 $TRIP.COM-S (09961.HK)$ 以及 $BIDU-SW (09888.HK)$ (-S indicates secondary listing; -W indicates Weighted Voting Right Stocks); 22 companies are "dual primary listed", such as$BABA-W (09988.HK)$、$BeiGene (ONC.US)$、$BEKE-W (02423.HK)$and$Yum China (YUMC.US)$。
Among the large companies listed in the USA, only$PDD Holdings (PDD.US)$As a few large stocks have yet to return, the majority of the remaining companies are of small to medium market cap.
According to previous statistics from the Institutions, $PDD Holdings (PDD.US)$ 、 $Futu Holdings Ltd (FUTU.US)$ 、$Full Truck Alliance (YMM.US)$、$Vipshop (VIPS.US)$、$Legend Biotech (LEGN.US)$、 $TAL Education (TAL.US)$ 、$Atour Lifestyle Holdings (ATAT.US)$、$FinVolution (FINV.US)$、$ZEEKR (ZK.US)$All meet the conditions for listing in Hong Kong.
China International Capital Corporation also provided the same statistics and pointed out that in addition to the aforementioned Chinese concept stocks that have returned or are likely to meet the return conditions, there are still over 300 Chinese concept stock companies, with a total market value around 300 billion Hong Kong dollars, mostly small and medium-sized companies, which may face significant risks.
The liquidity risk for large companies in the future is relatively controllable.
In summary, in the face of potential delisting risks, the risks of large-cap companies that have returned are relatively controllable. The liquidity gap estimated by China International Capital Corporation due to some investors being unable to convert is 300-400 billion Hong Kong dollars, equivalent to 1.5-2 days' trading volume on the Hong Kong Main Board (since the beginning of the year, the average daily trading volume has been 254.24 billion Hong Kong dollars), relative to the trading of these stocks within 10 days or 5 days.
If the impact caused by the short-term liquidity gap occurs, it can also provide better re-entry opportunities, as it is not due to fundamental reasons, especially for those high-quality leading companies.
Since the beginning of this year, southbound funds have continued to flow in significantly, with a net inflow of over 600 billion Hong Kong dollars accumulated from the beginning of the year to now, and it is expected to become an important source of funding for the demand for the return of Chinese concept stocks.
However, for the remaining 300 companies that do not meet the return conditions, they may face significant risk exposure. If the Hong Kong Exchange can further optimize or even relax the return conditions at that time, it will also help alleviate some pressure.
How many Chinese stocks are currently held by U.S. institutions?
According to the USA Treasury, American investors held 622.2 billion USD by the end of 2023, including A-shares and overseas Chinese stocks. Although this data covers various types of American investors, it is somewhat outdated, only up to the end of 2023.
It is worth noting that American investors hold about 622.2 billion USD in Chinese stocks, which has significantly decreased from the historical high of 1.08 trillion USD in 2020, but still ranks as the fifth largest country for American overseas stock investments, behind the United Kingdom, Japan, Canada, and France.
Considering the MSCI Chinese Index has rebounded by 23% since the end of 2023, without accounting for any inflows or outflows during this period, China International Capital Corporation anticipates that Hold Positions may reach 700-750 billion USD. However, as investors may hold shares through other means (such as offshore financial centers), this figure may not be fully captured, and the actual size could be higher.
In contrast to the data from the USA Treasury, China International Capital Corporation has summarized the holdings of different types of institutional investors through a bottom-up approach. Its summary indicates that among over 3,100 major global asset management institutions (active + passive), there will be approximately 717.1 billion USD in Market Cap of Chinese stocks by the end of 2024, with American institutions accounting for 51%, which is 370.8 billion USD, a decline of 43% from the peak of 652.9 billion USD at the end of 2020.
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Editor/lambor
