After the Spring Festival, the Hong Kong stocks of the "WuXi Department" fell sharply at the opening of the "catastrophe", who was to blame? The reduction of holdings was pushed to the forefront again

Finance Associated Press, February 14 (Reporter Cheng Mengqi) Hong Kong stocks are always the first to open after the Spring Festival, and the performance of the market is closely related to the international situation and China's policy and economy during the holiday, so it is regarded as a "barometer" of A-shares. On the fifth day of the Lunar New Year, Hong Kong stocks also "welcomed the God of Wealth", and the three major indexes rose together, without the support of Beishui, the market turnover was 57.064 billion Hong Kong dollars.

However, the "WuXi system", which was blocked by the proposal of US lawmakers before the holiday, has not come to an end after a round of sharp falls and pullbacks. "WuXi Department" continued to "cross the catastrophe" after the Spring Festival. Today, Hong Kong stocks WuXi AppTec fell 18.62% to close at HK$38.45, a three-year low, WuXi Biologics fell 9.46%, and WuXi XDC fell 8.61%.

Before the Hong Kong stock market opened, WuXi AppTec made a comeback

On the news side, some media said that four members of the U.S. Congress sent a letter to Washington officials on February 12, asking the U.S. government to include WuXi AppTec and WuXi Biologics in the sanctions list. In response, WuXi AppTec responded urgently on February 13 that it strongly opposes misleading allegations, inaccurate determinations and predetermined actions against the company without due process, and reiterates that it has not, is and will not pose a national security risk to the United States in the future. WuXi Biologics said that the statements in the letter were untrue, reiterating that it did not, is or will not pose a risk to the national security of the United States or other countries. The Company has always adhered to the principles of compliance and operates in accordance with applicable laws and regulations in the regions in which it operates.

U.S. lawmakers seem to have seized on WuXi AppTec lately. Not long ago, on January 26, a news about the proposed introduction of the "Biosecurity Act" in the United States caused the share price of A-share WuXi AppTec to suddenly fall to the limit, and Hong Kong stocks fell by 30%. Although WuXi AppTec issued a quick announcement on January 27 to explain and clarify the relevant facts, WuXi Biologics CEO Chen Zhisheng directly stated that "this is just a proposal by a lawmaker, and it is a very unlikely event to become a law, and it will take several years." However, on January 29, WuXi AppTec's stock price still fell again. The market value evaporated by more than 35.7 billion yuan in two days. Also affected were WuXi AppTec's H-shares, which continued to fall by more than 10%.

In February, affected by the Morgan Stanley research report, WuXi AppTec began to rise slightly. The research report believes that the market may be allergic to the introduction of the U.S. biotechnology restriction bill, and believes that WuXi AppTec's stock price is overreacting, providing potential opportunities. Even if the bill were to become law, it would only limit the outsourcing of projects that receive federal funding to overseas companies. Morgan Stanley believes that WuXi AppTec, as a cost-effective service provider, will benefit from the development of the biopharmaceutical industry.

The frequent reduction of holdings by major shareholders has been questioned

Although the main reason for WuXi's plunge around the Spring Festival was the proposal of US lawmakers, and the probability of the final proposal being written into law is unknown, many shareholders in stock bars and forums are accusing WuXi of reducing their holdings and continuously splitting and listing for consecutive years.

According to wind data, since 2021, A-share WuXi AppTec has experienced a total of 51 major shareholder reductions, and only 7 major shareholder holdings occurred in early 2021, and all of them were dividend transfers and share incentive increases, and the number of holdings is not worth mentioning in the face of the huge reduction amount. In 2023 alone, WuXi AppTec has reduced its holdings by major shareholders eight times, with a total reduction of more than 160.7 million shares, corresponding to a market value of more than 10 billion yuan. On January 29, WuXi AppTec sold nearly 630,000 A-share refinancing bonds, which was more than 30 times higher than the 20,000 shares on January 25.

A-share WuXi AppTec's major shareholder reduction in the past three years, wind

It is worth noting that in mid-January, just before the collapse of WuXi AppTec's AH shares, WuXi listed companies were reduced by BlackRock, JPMorgan Chase and Capital Group, respectively, and the trading price was 30% to 50% higher than the stock price after the crash. On January 10 and January 11, Capital Group and JPMorgan Chase had just increased their holdings in WuXi AppTec, and the interval between the increase and decrease of holdings was so short, and the time of the reduction was exactly before the stock price plummeted.

港股药明康德近期公告，wind

In addition, according to Wind data, northbound funds sold WuXi AppTec by a net of RMB3.220 billion in the first seven trading days of the Lunar New Year. As of the end of the third quarter of last year, the "goddess of medicine" Gülen managed CEIBS Healthcare has been among the top ten shareholders of WuXi AppTec for five consecutive quarters, and the fund reduced its holdings of WuXi AppTec by 2,069,800 shares in the third quarter of last year, and has reduced its holdings by 3,636,700 shares since the first quarter of this year.

WuXi has 5 listed companies

As a leading company, WuXi AppTec's stock price changes and splits have been attracting much attention. From the perspective of stock price, since 2023, WuXi AppTec's share price has bucked the trend, rising nearly 17% during the year. In the same year, WuXi continued to spin off WuXi XDC and listed on the Hong Kong Stock Exchange. With the completion of WuXi XDC's H-share listing in November 2023, WuXi Group now owns five listed companies, including WuXi AppTec, WuXi Biologics, JW Therapeutics, Kodi Group and WuXi XDC, with direct financing of nearly RMB60 billion.

Among them, the recently listed WuXi XDC took only 4 months from spin-off to independent listing, raised HK$3.8 billion, with a market value of over HK$32 billion on the day of listing, and had luxury cornerstone investors such as Invesco Investment, Qatar Investment Authority, UBS, Sequoia, etc., which rose nearly 40% on the first day, making it the largest and most high-profile IPO of Hong Kong pharmaceutical stocks in 2023.

However, the market value of several listed companies in the "WuXi Group" is also evaporating from historical highs, with only the market value of WuXi AppTec's A-share market evaporating by about 330 billion yuan from the high in 2021, and even the market value of WuXi XDC, which was finally split and listed, has also evaporated by nearly half of about HK$16 billion from the first day of listing.

(Finance Associated Press reporter Cheng Mengqi)