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The United States Security and Exchange Commission (SEC) implements new rules requiring Chinese companies seeking listings in New York to provide additional risk disclosure documents. At the same time, Chinese technology stocks are experiencing their worst month since the global financial crisis.
New York-listed Chinese technology stocks fell 22 percent this month, the biggest drop since 2008, Financial Times reported on Friday (July 30), citing the Nasdaq Golden Dragon China index. Two of the country’s largest tech companies saw huge losses, Tencent fell 16 percent, while Alibaba lost 10 percent.
The declines follow a crackdown by Chinese officials against technology companies and private education companies in the country, in addition to the implementation of new laws on how Chinese companies list on foreign stock markets, per FT.
At the same time, the SEC stated that Chinese companies cannot fundraise in the US until they provide a detailed explanation of their legal structure and possible risk factors of Beijing meddling in their business affairs, Reuters reported.
SEC chairman Gary Gensler said he had also asked staff to participate in targeted additional filing assessments for companies with significant China-based operations, according to Reuters.
Before the recent developments, U.S. public quotes of China-based companies reached $12.8 billion in 2021, a record, Reuters reported based on data from Refinitiv.
The recent crackdown on tech companies by Chinese officials has cooled the IPO flames, a move that escalated after regulators pulled Didis apps from app stores and launched an on-site cybersecurity investigation, according to Reuters and other media reports. Regulators have threatened Didi with fines and a possible delisting from the New York Stock Exchange.
Chinese companies that list in US stock markets began to decline earlier this week after officials in China’s technology sector ended startups that accepted funds from outside investors. US-listed Chinese stocks in the education sector fell out as stock prices fell on the news.
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