SEC halts China IPOs seeks to tighten guidance on risk disclosures
By Alexander Bueso
Date: Friday 30 Jul 2021
(Sharecast News) - America's financial markets' watchdog has halted registrations for Chinese corporates seeking to list on US stock markets.
Citing people familiar with the matter, Reuters reported that the Securities Exchange Commission wants to put in place new guidance on disclosures to investors of the risks around a possible fresh regulatory crackdown by Chinese authorities.
Year-to-date, the S&P/BNY Mellon China Select ADR Index, which tracks the American Depository Receipts of US-listed Chinese firmes has fallen by 22%, versus an 18% gain for the S&P 500.
According to Refinitiv data, 418 Chinese companies are listed on US exchanges.
Lax reporting standard for those firms, many of which do not comply with American auditing and corporate governance standards has long been a bone of contention for US regulators and lawmakers.
Earlier in the same month, Beijing barred ride-hailing app Didi from signing up new users citing concern over the protections in place to safeguard users' data.
The move came just five days after Didi had floated on the New York Stock Exchange, with sharp selling ensuing.
That crackdown was followed over subsequent days by similar actions against other technology companies.
Some observers believe that Beijing's new stance signals a looming 'Cold War' with the US, whilst others see a desire by Beijing to foster greater competition in the internet and technology sectors.
Among the former is Stephen Roach, a formar chairman of Morgan Stanley Asia.
Another possible motive behind Beijing's actions might be a desire to exert greater control over the biggest private companies in that country's internet sector.
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