Beijing crackdown sparks stockpile fallout

Fallout from Beijing’s crackdown on U.S.-listed Chinese education stocks caused values ​​to drop following cutbacks in foreign investment, CNBC reported Friday (July 23).

Chinese stocks listed in the United States plunged following reports of a crackdown by government officials in China’s tech sector demanding a ban on outside donors. Two Chinese education stocks listed in the U.S. saw their prices drop following reports that a government crackdown was imminent over bans on international support.

The mandates in place do not allow teacher training companies to gain support from action lists, according to a copy of the Chinese document seen and translated by CNBC. The information site in China, Caixin, said the new restrictions were already being rolled out across the country.

Jesse Fried, a law professor at Harvard University, said he believes this may not last. “My hunch is that China will try to find a compromise with the US government,” Fried told MarketWatch. “For now, China wants to keep US markets open and available for these young Chinese companies, which China’s underdeveloped capital markets cannot support enough. And even though Congress likes to shake the anti-rattle. China, there is a lot of interest on Wall Street in keeping this pipeline open, due to the huge IPO fees. ”

CNBC said in its report that Chinese stocks traded in the United States could end up being delisted by 2024. US laws passed by Congress in 2020 mandated that any international company listed in the United States should be subject to delisting. ‘an audit or possibly be removed from the US stock exchanges. .

Legislation passed by Congress late last year requires foreign companies listed in the United States to accept an audit inspection within the next three years or be delisted by the U.S. stock exchanges, as part of a multi-year effort in Washington, DC to address the issue of the lack of rights US investors have to these stocks.

News of the possible delisting of Chinese Didi U.S. stock markets, along with falling prices, caused monthly losses totaling more than 25 percent, as reported earlier this month.

China’s initial public offerings (IPOs) suffer delays – whether they are pulled or put aside in some other way. Earlier this month, TikTok owner ByteDance saw its public offering dismissed in its efforts to list shares outside of China.