China Makes Plans to Ban Some Foreign IPOs
Chinese Companies With Sensitive Data Will Be Prevented From Listing in the US
Tensions between Washington and Beijing surrounding technology and data privacy have been running high for some time. The conflicts have impacted Chinese and American companies as well as investors around the world.
In recent weeks, Chinese stock market regulators have said they plan to propose a new set of rules which would prohibit certain Chinese companies from listing in the US. The ban would apply to Chinese companies with significant amounts of sensitive consumer data. Companies with less private data, like those in the pharmaceutical industry, would likely still be allowed to pursue foreign listings. The move is motivated by concerns about Chinese national security.
New Regulations for Chinese Tech Giants
For years, Chinese tech companies have used a complex corporate structure to get around foreign investment restrictions. Chinese technology companies including Alibaba (BABA), DiDi (DIDI), and Tencent Holdings (TCEHY), have had success trading in the US through a corporate structure called a Variable Interest Entity.
The new rules would allow Beijing to exert more control over companies using this structure. The regulations would also require Chinese companies to apply for formal approval from a cross-ministry committee for overseas IPOs. At the moment, private companies in China are not required to get approval for foreign listings.
Unanswered Questions
The new rules proposed by the Chinese regulators still need to be finalized. It is likely that they will be implemented in the fourth quarter of the year. China has asked some companies to put off their foreign IPOs until then.
There are still a number of questions surrounding how the regulations will impact the way that Chinese companies gain access to foreign capital. It is also not yet clear how the rules will affect companies which already trade on foreign markets.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS21083003
All your finances.
All in one app.
App Store rating
