Sara Patel
TLDR:
Wall Street banks are tiptoeing around their dealings with Chinese companies, trying to avoid angering Beijing as it takes a harsher stance on cross-border listings.
JPMorgan Chase, Bank of America, and Morgan Stanley are reportedly reevaluating their approach to bringing Chinese companies to market, after regulators in China implemented new rules to tighten control over overseas listings.
The moves come after a number of high-profile instances of Chinese companies listing overseas, only to run into regulatory trouble in China.
New measures include giving more control over which Chinese companies can list overseas to the country’s securities regulator and banning overseas listings for firms with sensitive data tied to national security.
Bankers in Hong Kong and the US reportedly fear that regulators could end up scaring off companies considering an offshore listing for fear that they will not be able to generate significant institutional investment .
The involvement of overseas banks in Chinese companies “is becoming a touchy issue for the Americans,” according to Stafford Smith, China CEO of London-based law firm Wealands.
Wall Street banks are trying to navigate a potential political minefield, as they hope to bring Chinese companies to market without angering Beijing as it takes a stricter stance on cross-border listings. JPMorgan Chase, Bank of America, and Morgan Stanley are all said to be reevaluating their approach to handling Chinese listings following the introduction of new rules by regulators in China to tighten control over overseas listings. Under the new measures, the China Securities Regulatory Commission will have the final say over which Chinese companies can list outside of China, while firms with “sensitive” data related to national security will be banned from listing overseas. The moves are reportedly creating anxiety among bankers in Hong Kong and the US, who fear that they could deter companies from listing offshore for fear of not being able to attract sufficient institutional investment. Bankers have also raised concerns that the introduction of stricter rules could deter investors from buying shares in Chinese companies due to the added risk, making it harder for companies to raise funds via an initial public offering (IPO) outside of China. The involvement of overseas banks in Chinese listings “is becoming a touchy issue for the Americans,” said Stafford Smith, China CEO of law firm Wealands.
