Chinese ETFs Dive As Regulators Target Overseas Quotes
Chinese country-specific exchange-traded funds retreated on Tuesday as regulators stepped up their scrutiny of tech companies, especially those looking to be listed overseas to raise funds in the United States
In new guidelines released on Tuesday, Beijing announced that regulators should deepen cross-border audit oversight cooperation and amend laws and regulations “on data security, cross-border data flows and other management of confidential information. “, the Wall Street newspaper reports.
The guidelines were created in response to “profound changes in the economic and financial environment” due to what Beijing has described as growing anarchy in the capital market that has made regulatory oversight more difficult.
The deeper review also came days after China’s cybersecurity regulator said it had launched reviews of data security in mobile apps operated by Didi, Full Truck Alliance Co. and Kanzhun Ltd., which recently raised about $ 7 billion through initial U.S. public offerings in June.
According to Dealogic data, Chinese companies have raised more than $ 75 billion by being listed on the US stock exchanges since 2012. Since the start of the year, 36 Chinese companies have gone public in the United States, as per the set of 2020. The recent IPO of Didi, which raised $ 4.4 billion, the largest since the launch of Alibaba Group Holding in 2014, which raised $ 25 billion.
The Chinese government has announced that it will revise the rules for offering shares outside of China, calling for greater accountability from domestic regulators.
Bruce Pang, head of macro and strategic research at China Renaissance Securities, warned that these new guidelines target new Chinese IPOs that attempt to list in the United States.
“Such actions create short-term disruption and pressure on market sentiment, not only on listed tech companies, but also on the valuation of pre-IPO companies,” Pang told the WSJ.
The move could also be a political response after the tightening of US rules on listing foreign companies on its stock exchanges after former President Donald Trump signed a bill last year requiring company audit documents. foreign listed in the United States are open to US regulatory inspection. China has been reluctant to provide access to such audits, citing national security concerns.
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