Hu Zuliu Calls for Attention to Mergers and Acquisitions "Shortcomings": Mergers and acquisitions can address internal competition and overcapacity, putting pressure on listed companies

Topic: Boao Forum for Asia 2026 Annual Conference

On March 27, the Boao Forum for Asia 2026 Annual Conference was held in Boao, Hainan from March 24 to 27. At the forum titled “Creating a Sound Market Environment and Advocating Long-Term Value Investing,” Hu Zuliu, Founder, Chairman and CEO of the Spring China Capital Group, said, “I fully agree that we should cultivate long-term value investing, and that is very important for China’s listed companies and for China’s entire economy.”

Hu Zuliu said, “From the supply side, long-term value investing means that we must have investable targets that are worth holding for the long term and truly offer value-investment opportunities—this depends on many factors, including the quality of our listed companies. After the growth of China’s capital market from scratch to a larger scale, it has become the world’s second-largest market. Whether you look at the stock market’s market capitalization of $17 trillion, or the bond market’s nearly $29 trillion scale, both are extremely large and are only second to the United States, ranking second globally. But every day when people watch business and finance news, what we focus on is IPO new stock issuance. That is indeed very important, but very few people mention M&A.”

He further discussed, “In our country, M&A activity is relatively not very active. Of course, 2025 was an extremely good year—both new stock issuance and M&A became more active. But even so, last year, as a peak year over many years, the value of M&A was only 400 billion, which is still a far cry compared with the tens of billions in the United States. Moreover, relative to the market capitalization of the stock market, M&A execution is less than 2%—whereas in mature and active markets, regardless of how economic cycles fluctuate, this ratio often reaches 4%-5%. So our M&A scale is still very small.”

Why is M&A so important? Hu Zuliu explained, “Because when you look at financial history and economic development history, you will find that a highly active M&A market can drive industry consolidation. As everyone knows, we are currently facing a major bottleneck: all-industry over-exuberance and excess production capacity. All our trading partners are concerned about China’s excess production capacity.

Against this backdrop, few companies can continuously make profits; if that is the case, how could their stocks have long-term value for investment? The reason they don’t make money is that there are too many similar companies. That is where M&A comes in—M&A can respond to over-exuberance and excess production capacity, and bring pressure to listed companies.”

Hu Zuliu said, “For our listed companies, the process of getting listed is difficult—just like the gaokao. Once you pass the exam (get listed), things get easier. After listing, life is much better and there isn’t much special pressure. As long as you don’t cross regulatory red lines and don’t violate the law, you basically won’t have problems. The reasons behind this are, first, there is a lack of active shareholders; and second, there is a lack of pressure brought by M&A. If there is a risk of losing control of the company, management must operate cautiously and create value for shareholders.”

He said, “If China’s capital market becomes not only increasingly larger in scale, but also increasingly more active in M&A, then it can truly solve many of the macroeconomic problems we face, and ultimately bring persistent, strong pressure to listed companies—prompting them to improve operating performance, create shareholder value, and increase investment returns. That is the fundamental source of long-term value investing.” (Yan Yan)

Sina Statement: All meeting transcripts are compiled from real-time shorthand notes on-site. They have not been reviewed by the speaker. Sina.com publishes this article for the purpose of disseminating more information, and does not mean to endorse these viewpoints or confirm the descriptions.

Endless information and precise analysis are available on the Sina Finance app

责任编辑：Wang Xiang