Research On The Motivation And Economic Consequences Of Gdr Issuance By Domestic Listed Companies

In recent years,China has developed into the world’s second largest economy,but there is still a gap between China’s capital market and the international mature market.Improving the openness of the capital market and accelerating the integration of China’s capital market with the international standards have always been the key content of China’s construction and development.In 2018,the Shanghai Stock Exchange and the London Stock Exchange signed an agreement that listed companies on the Shanghai Stock Exchange could enter the international securities market by issuing global depositary receipts(GDR),realizing the interconnection between the Shanghai Stock Exchange and the UK securities market,and the formation of the Shanghai Stock Exchange mechanism.In 2022,the CSRC will further expand the "Shanghai Luntong" to "China-Europe tong",and the GDR issuers will expand from listed companies on the Shanghai Stock Exchange to listed companies on the Shenzhen Stock Exchange,and the GDR issuers will expand from the UK market to the Swiss and German markets.At the end of 2018,Huatai Securities announced that it would go to the London Stock Exchange to issue GDR and successfully issue it on June 17,2019,becoming the first GDR issue in China.Since the formation of the interconnection mechanism,15 listed companies have successfully issued GDR,and more than 40 listed companies have announced their intention to issue GDR.At the moment of the high popularity of China-Europe connection,by studying the causes and economic consequences of the GDR issuance of Huatai Securities,we can provide important reference value for the construction of China’s depositary receipt system and the international financing of listed companies.This paper selects Huatai Securities as a case study.Through the analysis of the current situation of China’s listed companies issuing GDR,the introduction of Huatai Securities and the analysis of the process and motivation of issuing GDR,it introduces the basic situation of GDR issuance and the company in detail.In the aspect of economic consequence analysis,this paper first analyzes the arbitrage space caused by the price difference between domestic and foreign markets,and studies and combs the formation reason and mechanism of arbitrage space;After that,the paper studies and analyzes the excess rate of return generated by the event of Huatai Securities announcing GDR in the short term through the event research method,and expounds the medium and long term market response to this event from the perspective of A-share market and GDR market;Finally,the exchange gain and loss,main business and monetary capital of the company are studied from the financial perspective.Through research,it is found that there is arbitrage space due to different market valuations of domestic and foreign securities,but it will disappear rapidly after the end of the restriction period under the influence of market mechanism;The short-term,medium and long-term impact of GDR issuance on the market response is limited,especially in the overseas market,the liquidity of GDR is gradually declining or even declining with the disappearance of arbitrage space;In terms of financial effect,the issuance of GDR can effectively reduce the exchange loss of the company,but also increase the exchange rate risk of the company.In addition,foreign currency fund-raising is conducive to the company’s direct use of foreign currency for investment and thus promote the deepening development of international business and main business.Finally,according to the results of the study,this paper gives relevant suggestions to the government,enterprises and investors based on the experience of the case of GDR,the issuer of Huatai Securities.This paper analyzes the motivation and economic consequences of the issuance of GDR by Huatai Securities,studies the arbitrage space,market reaction and financial reaction caused by this event,and puts forward relevant opinions.Under the background of the deepening internationalization of China’s capital market and the increasing popularity of China-Europe cooperation,it can provide positive reference for the country to further improve the level of opening up and Chinese enterprises to go global.