Investor Activism Is Heating up in China's Capital Market

Investor Activism Is Heating up in China's Capital Mark

In recent years, China's capital market has witnessed rise of investor activism. Last year, the battle between Vanke, the largest real estate developer, and activists led by Conglomerate Baoneng Group attracted great attention from investment community. This remarkable event is a highlight of the surge of activist campaigns in China since 2015.

According to statistics from our RoboR research platform, we found that there have been 293 total activist campaigns announced in the past three years. Due to financial deregulation with aim to stabilize the stock market after the 2015 meltdown, activist campaigns started to burst from the second quarter of 2015. To activists, market crash provided a great chance to achieve board control and takeovers from targeted companies.

53fad389-13c0-4da9-bf0c-a4f172ba43db.png
7c7b6e77-b4e6-4f97-8a08-8edf40ccc1aa.png
47038c04-8eae-462f-aef7-b58ebcba5b4e.png

In China, most of activists are insurance companies, followed by hedge funds and industrial investors. Investor activism generally can push up stock prices of targeted companies. However, based on our analysis, low-quality stocks, such as those receiving the special treatment (ST) designation still perform poorly even during activism campaigns.