1.6.2024

Taking the period around Baidu's IPO in 2005 as a starting point, the past two decades of Chinese assets going overseas for listings—especially the last five turbulent years—have seen earth-shaking environmental changes. If we were to identify one of the biggest shifts, Dolphin Research believes many listed companies still haven't adapted to the evolving valuation system, which demands progress in corporate governance. More specifically, this means share buybacks.

Originally, since last year, many individual stocks had begun to adapt, gradually implementing dividends and buybacks, with some companies showing genuine commitment in terms of returns. However, the recent wave of convertible bond financing to support buybacks—led by JD and followed by Alibaba—has left some market participants puzzled:

1. Didn't most U.S.-listed Chinese assets claim to have ample cash flow? Why borrow money for buybacks?

2. The market is familiar with the flashy moves of major companies raising capital at high valuations—but what's the playbook for raising funds at low valuations amid high-interest rates?