China’s Crackdown on Firms Trading in U.S. Could Kill $2tn Listings Market

Date: 19 July 2021 - 21:44

News ID: ۹۲۶۲۵

MOSCOW (RT) - New regulations concerning listings of Chinese firms on foreign exchanges are likely to mean that Beijing aims to put a lid on the U.S. IPO market altogether, market experts say.
The Chinese State Council said in a recent statement that all businesses with 1 million or more users will have to get approval from the country’s cybersecurity regulator if they want to list overseas. Prior to that, Beijing also announced plans to amend the rules of “the overseas listing system for domestic enterprises,” as well as to enforce control of cross-border data flows and security. These steps may bring about an end to Chinese initial public offerings (IPOs) in the U.S., industry experts say.
“It’s unlikely there will be any U.S.-listed Chinese companies in five to 10 years, other than perhaps a few big ones with secondary listings,” Paul Gillis, a professor at Peking University’s Guanghua School of Management in Beijing, told Bloomberg.
Until recently, there were some 248 Chinese companies listed on U.S. exchanges, mostly tech firms, including eight state-owned enterprises, with a total market capitalization amounting to $2.1 trillion, CNBC reported, citing the U.S.-China Economic and Security Review Commission. Now, the Invesco Golden Dragon China ETF (PGJ), which tracks U.S.-listed Chinese shares, has reported that the number has dropped by a third over the past six months amid the regulatory crackdown.