STRATEGIES FOR SHORT SELLING SUCCESS: A FOCUS ON CHINESE CONCEPT STOCKS, NIO INCLUDED

Abstract

The rapid development of China's capital market in recent years, coupled with the advent of the big data era, has opened up new avenues for enterprise growth. Enterprises, while actively engaging in technology research, development, and innovation, are confronted with pressing financing needs. In response, some companies are exploring listing on overseas capital markets.

However, the year 2022 brought a significant challenge as the U.S. Securities and Exchange Commission (SEC) unveiled its "pre-delisting" list, which encompassed over 150 Chinese concept stocks. These stocks now face the looming threat of delisting and are increasingly targeted for short-selling by foreign institutions, resulting in not only a loss of refinancing opportunities but also substantial financial consequences.

This paper focuses on NIO, using two short-selling incidents as a starting point. It employs a comprehensive analysis of the short-selling transmission chain, examining the roles and impacts of each stakeholder within the short-selling mechanism. The objective is to identify recommendations and strategies to mitigate the challenges faced by Chinese concept stocks in the context of short-selling. The insights provided aim to serve as valuable references for listed companies, accounting firms, investors, and government regulatory bodies.