Core Viewpoint - State-owned capital has become a significant player in S transactions, rising from a 6.9% market share in 2020 to the second-largest seller by 2022, maintaining around 20% share in subsequent years [2][3]. Group 1: Cross-Border Transactions - Cross-border S funds are emerging as a new option for state-owned funds to revitalize existing assets, but they face unprecedented challenges [3]. - Each cross-border fund transaction requires separate applications for capital entry and exit, leading to long approval cycles and uncertainty [5][6]. - Recent policy changes from the State Administration of Foreign Exchange aim to simplify cross-border investment processes, potentially benefiting state-owned S funds [8][9]. Group 2: Taxation Issues - High tax burdens have led to the abandonment of several cross-border S fund transactions, with some facing effective tax rates exceeding 40% [11][12]. - The complexity of tax regulations across different jurisdictions adds to the challenges, with varying tax treatments for cross-border equity income [13][14]. - Recent initiatives to optimize the tax environment have been introduced, but specific guidance for cross-border S fund transactions remains insufficient [15]. Group 3: Information Barriers - Information asymmetry poses significant challenges in cross-border transactions, with foreign funds often reluctant to share detailed financial data [17][18]. - Legal compatibility issues between different jurisdictions complicate transactions, increasing costs and extending timelines [19][20]. Group 4: Solutions and Developments - Hainan Free Trade Port is attempting to enhance cross-border capital flow through the introduction of Free Trade Accounts [22][23]. - Various regions are exploring solutions to facilitate cross-border S fund transactions, including the Shanghai QFLP pilot and the establishment of dedicated cross-border transaction channels [24]. - Despite challenges, the market shows optimism, with a 150% increase in cross-border S fund transaction volume in 2024 compared to 2023 [24].