Chinese companies seeking capital have long headed to the U.S. stock market to tap its deep-pocketed investors, raising more than $100 billion through first-time share sales over the past two decades. This money flow was immensely profitable for all involved: The founders, the bankers, early investors and new shareholders. Yet all this now looks set to change. China has pledged to write new rules for companies going public outside the mainland and to step up oversight of those already trading offshore. It’s unclear whether Didi Global Inc.’s contentious initial public offering in June was the catalyst; the U.S. has been taking steps to force some Chinese firms to open their books or face delisting, and now has blocked new public offerings. Either way it’s a major shakeup for Chinese companies -- which account for about 4% of America’s $50 trillion equity market -- as well as their private equity backers and Wall Street.
The Cyberspace Administration of China, the country’s internet regulator, has proposed stringent new rules on overseas listings. Companies with data on at least 1 million people will be required to undergo a cybersecurity review before they can conduct an IPO abroad. The review will also look into potential national security risks from such IPOs. Companies controlling large amounts of sensitive data may be banned from listing in the U.S. altogether, Dow Jones reported in August. Regulators are also said to be considering requiring firms that have already...
Read Full Story: https://www.washingtonpost.com/business/why-china-and-us-are-clashing-over-stock-listings/2021/08/30/20fe7d7c-0972-11ec-a7c8-61bb7b3bf628_story.html
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