Weibo’s plan to go public in Hong Kong shrouded in uncertainty by Beijing’s tough new data regime

Weibo’s plan to sell shares in Hong Kong is clouded by uncertainties stemming from Beijing’s tough new data regulations, says the Chinese social media platform with 250 million daily active users in its listing prospectus, putting a spotlight on the national security issues now facing tech companies.

China’s answer to Twitter, which frequently breaks news in the country’s tightly-controlled cyberspace, filed a draft prospectus with the Hong Kong stock exchange last week, in another step towards a secondary listing in Hong Kong after it went public on Nasdaq in April 2014.

While the secondary listing in Hong Kong path is now a well-trodden one – following similar moves by Alibaba Group Holding, owner of South China Morning Post, Baidu, JD.com and Bilibili – Weibo’s offering comes at a time when the Cyberspace Administration of China (CAC) is upping its scrutiny of domestic companies seeking to go public outside mainland China, including Hong Kong.

A draft regulation published by CAC, which is seeking public feedback until the middle of December, has made it clear that IPOs in Hong Kong by Chinese tech companies have to go through a data security review if national security concerns are involved. And it’s easy to see why Weibo, with its hundreds of millions of users, could fall squarely into this category.

Just in the past week Weibo has been embroiled in controversy after allegations were posted on the platform by Chinese tennis player Peng Shuai against China’s former Vice Premier Zhang Gaoli.

While Weibo has not gone into the details of any specific regulations or cases, it has said there are “substantial uncertainties” brought to its operations by China’s rapidly evolving cybersecurity regime. “The cybersecurity legal regime in China is relatively new and evolving rapidly, and their interpretation and enforcement involve significant uncertainties,” Weibo said in its draft prospectus.