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China tightens rules for global stock offerings, crimping the steady flow of companies seeking to raise funds in worldwide markets
- The procedure for overseas listings by Chinese companies will be revised, according to a statement issued by the State Council
- China made up a third of the world’s total IPO proceeds, the highest among all nations, according to Refinitiv’s data
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China’s government has tightened the rules for initial public offerings (IPO), introducing a sweeping overhaul to how the nation’s companies can raise capital onshore and overseas, in a move that may stymie some of the biggest deals in the world’s financial markets.
The procedure for overseas listings, including IPOs in such markets as the New York Stock Exchange and the Nasdaq, will be revised, according to a statement issued by the State Council, as the Chinese government’s cabinet is called.
The announcement triggered a sell-off in shares of Didi-Chuxing, which raised US$4.4 billion last week in New York. The company closed nearly 20 per cent lower on Tuesday.
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The move could derail the steady flow of other stock offers by Chinese technology and biotech companies in New York and Hong Kong. The US capital market has topped the global rankings as the biggest destination for IPOs, including those by Chinese companies.
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The latest rules come hot on the heels of an unprecedented move by the Cyberspace Administration of China to remove Didi-Chuxing’s application from app stores, which triggered as much as 30 per cent plunge in its stock in US pre-market trading.
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