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Thursday, March 23, 2023

SEC will tighten requirements for chinese companies on american exchanges

Chinese companies listed on US stock exchanges will be required to disclose the risks of Chinese government interference in their business in their financial statements.

This was reported by Reuters with reference to the statement of the representative of the US Securities and Exchange Commission (SEC).

This is the first statement by a SEC spokesman since the Chinese regulators launched a large-scale investigation into the largest taxi service Didi Global, writes RBC.

The investigation began shortly after its listing on the New York stock exchange, during which the company raised $ 4.4 billion. Since then, the share price of the taxi aggregator has fallen by 25%.

At the end of last week, it became known about the plans of the PRC regulators to tighten the regulation of online education in the PRC, including prohibiting raising capital from foreign investors and conducting IPOs.

As a result, massive sales began in the promotions of Chinese educational platforms, due to which some EdTech companies lost more than half of their value in a day.

On Saturday, the PRC’s antitrust regulator – the State Administration for Market Regulation of China (SAMR) – ordered Tencent, the owner of the WeChat service, to relinquish its exclusive rights to license music and fined the company for anticompetitive behaviour in the amount of $ 77,000.

The sales of education services continued on Monday, and other Chinese companies, including those related to technology, healthcare and real estate, fell along with the education sector.

The Financial Times estimated that investors sold $ 2 billion in shares of Chinese companies listed on the Shanghai and Shenzhen exchanges on Monday, as tighter regulation on education companies raised concerns about further tightening of regulatory requirements in other sectors.

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“We are now seeing panic selling in the market as investors assess the possibility that Beijing will tighten regulation in all sectors that have seen strong growth in recent years,” Castor Pang, head of research at Core Pacific Yamaichi, told Bloomberg.

“We do not think that now investors can buy shares at the bottom. We just don’t know where this bottom is, ”he added.

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