Privatization in 2020

Will this month be the month in which the largest number of listed companies in Hong Kong stocks have announced privatization?

First, Huadian Fuxin (00816) announced privatization, and then came to Vietnam Manufacturing and Processing (00422) and Capxon International (00469). These two small Taiwan-funded listed companies announced privatization, and then went to Jinmao Hotel (06139). Privatization, and Jinwei Medical (00801) and Yanxiang Intelligence (02308), which have been suspended from trading, are estimated to be privatized. At least six listed companies may announce privatization within a month, which is estimated to be the highest in history.

As stated in my previous article, the valuation of small and medium-sized stocks continues to shrink, and eventually many large shareholders of small and medium-sized stocks will choose to privatize the company and earn huge profits from valuation discounts, while small shareholders will be taken advantage of. However, this is a helpless matter. The market always avoids old economic stocks, especially small and medium-sized stocks. Therefore, privatization may already be the best result for many small and medium-sized stock shareholders. Privatization of low valuation.

As the Chinese stocks representing the new economy return to Hong Kong for the second listing, and more and more biotech stocks go to Hong Kong to raise capital, the status of new economic stocks in Hong Kong stocks becomes more and more important, while the old economic stocks do the opposite. Acting vigorously, privatization is exactly the replacement of old and new, and it also reflects the investor’s orientation.

To welcome the listing of new economic stocks, I expect to earn new low-risk returns; to bid farewell to old economic stocks, I also hope to participate in privatization arbitrage. IPO and privatization arbitrage, in fact, precisely represent a low risk return with high certainty.