China “Expand Communication with the US” as the US Strengthens its IPO Review
China announced that it would expand communication with the United States as the United States strengthened the review of Chinese companies‘ stock listings.
As the ‘China risk’ grows in the global capital market as the Chinese authorities regulate the listing of their own companies on the overseas stock market and hit IT and private education companies one after another, it appears that they are trying to ‘pause anxiety’ in the market.
According to Hong Kong’s South China Morning Post (SCMP) on the 2nd, the China Securities Regulatory Commission (SCM) said in a statement on the previous day, “The securities authorities of the two countries (China and the United States) maintain a spirit of mutual respect and We need to strengthen communication and find appropriate solutions to create sound policies and a sound regulatory environment for financial markets.”
“Since investment in the capital markets of the two countries is intertwined, the expansion of cooperation between the securities authorities of the two countries is inevitable,” the committee stressed.
“We will manage our relationships with investors, businesses and regulators in the future, and we will communicate closely with authorities in other countries to improve transparency and anticipation of new regulatory policies,” added.
The SSC also reiterated its commitment to further opening up China’s financial markets, saying the outlook for China’s capital markets is “predictable, sustainable and healthy.”
Earlier on the 30th (local time), the U.S. Securities and Exchange Commission (SEC) announced measures to require more disclosure regarding potential risks from Chinese companies that intend to sell their shares in the U.S.
In particular, the SEC requires Chinese companies to state that they are offshore companies (nominal companies with no real assets or business activity) when they list shares in them, and that the actions of the Chinese government may affect their financial performance.
The SEC’s action comes at a time when Chinese authorities have put the brakes on local companies’ listing on overseas stock exchanges.
The National Internet Information Service of China made security review mandatory by stipulating that Internet service companies with more than 1 million members must undergo a cyber security review by the authorities when they list overseas through the revised Internet Security Review Method (Rules) published on the 10th of last month.
In China, the standard of more than 1 million members is equivalent to almost all companies reviewing overseas listings, and it is evaluated that the overseas listing of Chinese technology companies is effectively changed to a permit system.