What Is a Red Chip?

Red Chips refer to stocks with the concept of Mainland China that are registered outside China and listed in Hong Kong. "With the concept of Mainland China" mainly refers to Chinese holdings and main businesses in Mainland China.

Red chip

Red Chips refer to stocks with the concept of Mainland China that are registered outside China and listed in Hong Kong. "With the concept of Mainland China" mainly refers to Chinese holdings and main businesses in Mainland China.

Earlier red-chip stocks were mainly formed after the acquisition of small and medium-sized listed companies in Hong Kong by Chinese companies, such as "

Two Views on the Definition of Red Chips

It should be differentiated by business scope . If some

Earlier red-chip stocks were mainly formed after the acquisition of small and medium-sized listed companies in Hong Kong by Chinese companies, such as "

However, people in the industry also believe that there are also many technical and legal obstacles to the return of red chips. First of all, the so-called red chips refer to those stocks registered in Hong Kong that have the concept of mainland China, such as Shanghai Industrial and Beijing Holdings. Currently, red-chip stocks are listed in markets in Hong Kong, China, the United States, Singapore and the United Kingdom. Due to historical reasons, many large high-quality state-owned enterprises have previously been listed through red chips, and most of them are listed in Hong Kong. "From the definition of red-chip stocks, we understand that red-chip stocks are actually foreign companies. Foreign companies wanting to list on A shares, of course, must be approved by their shareholders, and they must also resolve the legal barriers to their listing. These issues are quite complicated to deal with. This is the reason why the return of red chips has not been resolved. "This situation is up to the chairman of the Securities and Futures Commission.

In terms of the red chip return issue method, it mainly includes the following three return paths: CDR model (issuance of depositary receipts), China Unicom model, and direct issue of A-share model. Unicom's model is to use a spin-off subsidiary to list in the country. This dual structure is likely to cause problems in corporate governance. At the same time, it is not in line with the current situation.

Blue chip stocks In the stock market, investors refer to the stocks of large companies that have important dominant positions in their industries, good performance, active trading, and good dividends as blue chip stocks.

The term "blue chip" comes from western casinos. In Western casinos, there are three colors of chips, of which blue chips are the most valuable, red chips are the next most valuable, and white chips are the worst. Investors apply these jargon to stocks to form "blue chips". Blue chip stocks are not static. As the company's operating conditions change and its economic status rises and falls, the ranking of blue chip stocks will also change.