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China’s stock market regulator pursues discussions with SEC over IPO ban

Written by Jiaxing Li Published on     2 mins read

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China is looking for ways to soothe the nerves of overseas investors as it cracks down on the tech sector.

The China Securities Regulatory Commission is calling for more communication with its counterpart in the United States after the US Securities Exchange Commission issued a new risk disclosure requirement for Chinese companies seeking IPOs in New York.

Beijing’s crackdown on private industries like Didi, Tencent, and companies in the edtech sector has not abated, and government organs will continue with probes for at least another six months. This has triggered panic selling among stock investors who hold shares of Chinese tech companies, slashing the share prices of Alibaba, Kuaishou, and Meituan in New York and Hong Kong.

The SEC confirmed with Reuters last Saturday that it is asking the Chinese companies to provide investors with more information about potential financial risks. The commission holds that Chinese companies are ignoring the rules for listing in the US. It issued a directive stating Chinese enterprises must disclose their offshore structure and the potential impact of government interference on their business.

Analysts from Morgan Stanley said last week that China’s shifting policies may affect long-term investor confidence in Chinese companies.

In an attempt to ease mounting concerns that investors have about the tech sector, China’s state news agency Xinhua said on Sunday that the country will continue to open up its capital market and actively engage overseas financial institutions and investors.

The stock market in mainland China and Hong Kong fared well on Monday after developments at the end of last week and over the weekend. The Shanghai Composite Index and the Hang Seng Index both witnessed an uptick of over 1% as of 1:00 p.m. Hong Kong time. Meanwhile, share prices of internet tech continue to slide, with Tencent and Meituan both losing more than 2%.

Read this: Tencent suspends new user registration for WeChat as tech crackdown shows no signs of halting

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