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Chinese Regulations Tighten Around Local Companies Aiming to Go Public

Since the beginning of 2021, the situation for the China-based tech companies listed on the US Stock Exchanges has been worsening. This is mainly because the regulatory authorities in China are launching scrutiny against these companies to investigate regulatory compliance.

The Chinese regulators are showing a lot of strictness when it comes to the adherence to data protection and data collection by country-based tech companies.

Just recently, the Chinese Government had passed a new law to enforce stricter rules for the data protection of users on such companies. This ended up helping the share prices of several China-based companies experience a rise such as Alibaba, Tencent, and others.

However, the Chinese regulatory authorities do not seem to be slowing down when it comes to introducing even stricter rules for such companies.

Just recently, it has been reported that the Chinese regulators are now going to make things even more difficult for domestic internet companies in China. It is being speculated that the internet companies from China may not be allowed to enlist themselves through the US Stock Exchanges.

The information around the particular news has been collected and shared by the Wall Street Journal. The report was reportedly shared by the media channel on Friday, August 27, 2021.

The report suggests that the regulatory authorities in China are very specific when it comes to imposing IPO restrictions on tech firms. According to the report, the tech firms the regulators are targeting include user-data gathering tech firms.

So far, no official announcement or information has been made or shared by the regulatory authorities in China in regards to banning tech companies from launching IPOs outside of China.

As a result of the reports emerging around the matter, the share prices for Alibaba have started experiencing a share price drop. The data shows that the share prices for Alibaba experienced a 3% drop since the announcement made by the Chinese regulators.

This is not the only fall Alibaba has experienced since the beginning of the month. Ever since the Chinese regulatory scrutiny began, Alibaba has experienced an overall 15% drop since the beginning of August 2021.

The Invesco Golden Dragon China ETF, known for tracking the performance of US-listed China-based tech companies has reported a 26% loss for share prices in the running quarter. The loss of the overall share prices for these companies is mainly attributed to regulatory scrutiny.

It has been added by the government of China that the decision for companies wanting to launch IPO in US Stock Exchanges is yet to be made. There are high chances that the companies may have to go through strict screening processes before they are allowed to do so.

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