Ai Guo: Need to beware of mysterious institutions frequently doing aerial enterprises have other attempts

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Ai Guo

Recently, a group of Chinese companies have once again been attacked by various types of international short-selling forces. For example, China Credit, a listed company on the Hong Kong Stock Exchange, was short-selled anonymously. The Nasdaq-listed company Pingtan Ocean was shorted by Aurelius Value and its share price may face volatility.

Short-selling organizations based on Shannon, Surabaya, Aurelius Value, and Anonymous Analysis have been staring at Chinese companies listed overseas for many years, profiting from Chinese companies by creating stock price fluctuations. However, the market lacks supervision over the short-selling institutions themselves – short-selling success, these institutions are happy and profitable; when they fail, they are not responsible. This mode of operation is a blessing, but it also brings a problem - who will supervise the mysterious short seller?

Among the short-selling institutions that frequently attack Chinese listed companies, Lishui and Shannon belong to the same type. Shannon was founded in 2001 and began to involve Chinese concept stocks in 2006. The company was first introduced in 2009, and founder Brock has lived in Shanghai for a long time. The motives and purposes of the two institutions are very clear, that is, short-selling profits, that is, for money.

There is another type of institution that is more mysterious, such as Anonymous Analytics. It is a branch of a hacker organization called Anonymous. The Financial Times refers to the latter as a loose hacking organization: there is no formal list of members, and “anonymous people” join forces to engage in mischief, protests or various forms of non-violent resistance. The hacker organization attacked Sony and has also caused the CIA website to last for hours.

Unlike the toon and the drowning, the purpose and motivation of the anonymous analysis of shorting is more complicated.

First, they have publicly stated that shorting is not for money. For example, they once introduced themselves: "We are not short-selling institutions. Anonymous analysis does not directly or indirectly hold or bear all the securities mentioned in the report." But they implicitly admit that considering their "joint parties, cooperation The short positions held by partners, member organizations, consultants, clients and other related parties do not preclude the existence of some “indirect benefits” in certain cases. This kind of plausible, unspeakable introduction and expression may be to better hide its true motives.

Anonymous analysis of such institutions (if it is an institution) is more dangerous and uncontrollable than the business model of Shannon and Surabaya. When an institution claims that short-selling actions are not related to economic interests, any company that is shorted will shudder. Because this is beyond the scope of business understanding.

Toon and drowning, if you want to make money by making money, you have to have real materials. In recent years, the short-selling success rates of the two companies have become lower and lower, indicating that the market situation is changing.

In the early days of short selling, some Chinese companies were unfamiliar with the supervision and disclosure rules of the mature financial system due to insufficient overseas experience, and it was inevitable that they would appear in business activities. Especially for US investors, Chinese companies are mysterious. People are difficult or unwilling to verify the authenticity. American investors tend to believe what the organization like Shannon said. The latter is using this information asymmetry. Profit.

However, in recent years, Chinese companies have not only become harder and harder, but have also eaten more and more international financial rules. They no longer simply choose to avoid, but directly fight back. For example, both Shannon and Lishui have been short-selling in New Oriental, but New Oriental has all come over; Shannon has shorted China Evergrande, and Xu Jiayin has returned directly to “怼”.

On the one hand, the quality of Chinese enterprises has been greatly improved, the standardization has been continuously improved, and the outstanding enterprises have become more resistant to malicious attacks. On the other hand, it has also shown that the public has been sneaky about the kind of speculative short-selling. No wonder, in other words, the short-selling routine is a bit out of order.

Anonymous analysis is more mysterious than toon and drowning. Under normal circumstances, organizations that do not publish their true identity have three purposes: one is to create a mysterious and panic atmosphere, to bluff; the other is to break away from the laws and systems of the real society and exercise superpower without supervision; Have an ulterior motive to hide their identity.

If you just pretend to be a mystery, or get some money with a short flag, it is still a trivial matter, but the reality is often not that simple. In the eyes of these institutions, there are often only their own value standards, and there is no world value standard. Of course, perhaps the value standard they claim to be is just an excuse for some kind of attack.

This kind of anonymous institution is not under the sun, nor under the supervision of various social systems. It can choose its own target shot in a dark corner and declare that it is a representative of justice, but no one can guarantee it. Whether it is a representative of justice.

Shorting has a history of hundreds of years, just like doing financial instruments. However, short selling has never been short-selling at no cost, nor is it a speculation without professionalism, and it is not a "quiet punishment" of unconstrained and supervised. Powerful tools are within the rules and systems. This is a blessing to humanity, and when it is not in the hands of the regulator, it can help.

At present, the Chinese economy is facing downward pressure, and the days of enterprises are not good. In order to expand the market and develop space, China is fully promoting the strategy of going global and vigorously promoting the “Belt and Road” initiative to seek more far-reaching international cooperation. The current anonymous analysis launches short-selling actions against Chinese overseas listed companies. The time is very sensitive and the motivation is more complicated. Considering the mysterious background of this organization, you can't help but be more careful.

In the future, as Chinese companies and Chinese funds go out in large numbers, China must be wary of these mysterious organizations that are above the existing legal rules. With the gradual opening up of China's capital market, these mysterious institutions are short-selling the stocks in the New York stock market and the Chinese stocks in the Hong Kong stock market. It is difficult to say that they will not gradually transfer to A-shares in the future, and their targets may also be transferred from listed companies. To a non-listed company, transfer from the securities asset end to the monetary system end.

If this is the case, this is not just a small account of several listed companies, but a big account of national financial security.

It is necessary for China to put short-selling behavior into the scope of supervision from the perspective of financial security, at least to let it operate within the Chinese legal framework, and must not let these mysterious forces without knowing the background do whatever they want.

For national regulatory agencies, international regulatory consensus should also be formed, requiring short-sale institutions to be sunny. This will allow short-selling institutions and other financial institutions to compete in the same market environment. Otherwise, allowing cold guns to be sold without cost will be a shame for global regulation.

As for all types of Chinese listed companies, they should also face all kinds of short and bearish attitudes calmly and actively. Even without the criticism of these professional short-selling institutions, they may encounter the seller’s lowering of ratings, etc. Accompanying is a normal state.

What companies need to do is to operate well and comply with the exchange's specifications. In the face of malicious short-selling attacks, we must be proactive in confrontation, and we must be good at using international laws and regulations to make room for ourselves. Nothing doesn't provoke things, something is not afraid of things, every setback is an opportunity for growth. This is the path that any company must go through from small to big.

(The author is a financial columnist)

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