Well, this was rather unexpected. China is giving the green light for companies to go public in the U.S as long as they follow the requirements. China’s securities regulator mentioned late Wednesday, according to sources related to the matter.
The past few weeks have put investors on high alert, speculating that Beijing is trying to block foreign capital flows into Chinese assets.
Cross-border stock listings might occur during the variable interest entity structure. A legal structure that’s well known to allow international investors access to shares in Chinese companies located in the U.S.
They recognized the structure as a key component in attracting foreign capital, but it would have to be adjusted should it raise any national security concerns, said source who wanted to remain anonymous.
China Securities Regulatory Commission Vice Chairman Fang Xinghai had a virtual meeting with major investment banks on Wednesday. The result was days of sharp selling in Chinese stocks amid fears of the increased crackdown by Beijing.
Bloomberg first reported news of the meeting.
Chinese stocks listed in Asia and the U.S. have plunged in recent days as Chinese authorities are clamping down on tech companies due to monopolistic practices and data security.
The new policy that called for Chinese after-school tutoring to become non-profits have sent stocks plunging down by double-digits in Hong Kong and the U.S.
The policy in particular banned tutoring companies from making any profit through the stock market or any foreign investors, especially through interest entity legal structure that enables international investors to get a hold of Chinese shares.
The speed of the policy taking place shook the stock market as Goldman Sachs downgraded Chinese education stock after speculation arise that the after-school tutoring market would shrink to less than a quarter of its current value, $106 billion.
However, the securities commission’s Fang said the policy was intended to reduce the burden on parents — not shut off foreign investment — and the education companies will have as much time as needed to restructure, according to the source.
In Malaysia on the other hand, there’s an ever-growing concern that they can’t keep up with supplying microchip parts to the rest of the world amid a rising number of Covid-19 cases. The government has yet to conclude its plan to address the numerous spreading of the virus in recent weeks leading to various states reaching thousands, not as before where most of the cases are concentrated in Selangor and WP Kuala Lumpur respectively.
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Source : CNBC