Chinese Tech Stocks Plunge on Tighter Access to U.S. Markets Chinese companies looking to list overseas are contending with pressure from U.S. and Chinese regulators, with it impossible to satisfy both.
May 07, 2021 | 08:00 AM EDT
Chinese tech stocks dropped suddenly on Friday, with Chinese regulators considering tightening rules on overseas listings. Those changes, if they come, could also make life tougher for existing international listings or newly listed growth companies.
The STAR 50 Index of next-gen stocks in Shanghai plunged 3.5% on Friday, having opened higher. There are now 269 STAR-listed companies but double that, 557 in fact, looking to join.
U.S. regulators are also maintaining their pressure on Chinese listings after a string of accounting scandals on American markets. The administration of President Biden seems set to continue a process set in motion under the Trump administration, despite opposition on Wall Street.
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Chinese Companies Hold Record IPOs in US, Despite Tensions
News Analysis
Despite ongoing political tensions between the United States and China, the world’s two biggest economies are becoming increasingly intertwined financially, especially on the IPO front.
Even as the U.S. Congress begins to tighten the reins on China-based companies listed on U.S. stock exchanges, these companies continue to seek American capital. They have raised record amounts of equity capital through initial public offerings (IPOs) on U.S. exchanges this year.
There are certainly reasons for China-based companies to be hesitant to list here. Some China-based companies were recently delisted from U.S. stock exchanges, such as the three major Chinese state-owned telecom providers and the energy firm China National Offshore Oil Corp.