Beijing is tightening the screws. About Chinese risks in the US market

Monday-Tuesday passed negatively on the Chinese stock market.

The Shanghai Composite Index sank 4%, and the Hong Kong Hang Seng Index fell 9%.

The focus is on regulatory risks, in particular, the problem of high-tech companies in the PRC.

According to a representative of the US Securities and Exchange Commission, Chinese companies that have placed securities on US exchanges must disclose the risks associated with the influence of government agencies on the exchange.

Some politicians fear that Chinese companies are systematically violating US regulations that require public companies to disclose business risks.

The regulatory environment and possible actions of the PRC government deserve attention.

Hang Seng index chart for the year, daily timeframe

Which companies were affected

In early July, Chinese regulators implemented measures against companies that recently had IPOs in the US markets or are planning to do so. In addition to the Didi taxi aggregator, restrictions also affected Full Truck Alliance and Kanzhun Ltd.

New messages arrived on Monday. Tencent Music has been asked by US regulators to terminate exclusive contracts with music property rights holders. Educational institutions were banned from raising funds in the stock market.

a common problem

In general, we can talk about a general trend, so it is too early to single out Chinese tech companies that are not exposed to risks. In the current environment, companies that have already listed their shares on the US stock exchanges are safer.

Restrictions on the activities of Internet companies are part of a global movement of regulatory bodies to combat antitrust practices, illegal use of personal data of users, tax schemes.

At the same time, political problems also intervened in the actions of the PRC authorities. It is about the confrontation between Beijing and the White House. With Biden’s rise to power, trade differences are still unresolved. With the escalation of risks, American companies targeting the Chinese market, in particular chip makers, may also be under attack.

BCS World of investments

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