According to the latest news, China’s securities regulator announced that the Asian giant will continue to allow Chinese companies to go public in the United States. However, However, they should meet the listing requirements.
Remarkably, regulatory actions in the last few weeks has raised investor anxieties that China is aiming to block foreign capital flows into Chinese assets.
The source familiar with the matter suggests the cross-border stock listings can also happen using the variable interest entity structure. Moreover, it refers to a legal structure that permits international investors to access Chinese firms’ shares in the United States.
According to the regulator, the structure is a great way for firms to attract foreign capital. However, the securities regulator would have modified it if there were national security concerns.
Meanwhile, Fang Xinghai, China Securities Regulatory Commission Vice Chairman, made a comment on a virtual meeting with major investment banks on July 28. Remarkably, it followed days of sharp selling in Chinese stocks on worries of boosted regulatory crackdown by the Asian giant.
Meanwhile, the securities regulator has stopped making an official public statement.
The policy banned tutoring firms from raising money through the stock market
Remarkably, Chinese stocks listed in Asia and the U.S. fell in the last several days. The decline came as Chinese authorities boosted scrutiny on tech firms over monopolistic practices and data security. Remarkably, those companies include giant companies, Alibaba and Tencent.
A policy document that started circulating on Friday urged Chinese after-school tutoring firms to become non-profits. Notably, it weighed on stocks by double-digits in Hong Kong and America.
Notably, the policy banned tutoring companies from raising money through the stock market or having foreign investors. Moreover, the policy particularly banned them from increasing money through the variable interest entity legal structure that lets international investors access Chinese shares.
On July 26, Goldman Sachs downgraded Chinese education stocks on anticipated the after-school tutoring market would fall significantly. The bank downgraded it to less than one-fourth of its current $106 billion size.
But the securities commission’s Fang announced the policy was aimed to reduce the burden on parents and not shut off foreign investment. Fang added that the education firms will have as much time as needed to restructure.
Moreover, the education policy in question was issued by the State Council and the Chinese Communist Party’s central committee.
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