Sunday November 14th 2021
Hong Kong IPO made difficult
China continues campaign against tech companies
The Chinese leadership is pulling domestic tech and online companies with a lot of user data even more closely. After foreign IPOs were tied to stricter rules in the summer, there should now also be security checks for candidates for the Hong Kong stock exchange.
The Chinese government wants to take a closer look before the planned IPOs in Hong Kong in the future when it comes to companies with a lot of user data. The responsible cyberspace regulatory authority published a draft in Beijing, according to which the companies concerned must apply for a security check in advance. This should apply to all those companies that handle data that could affect national security.
As recently as July, the regulatory authority suggested that every company that processes the data of more than one million users must undergo a security clearance before listing on the stock exchange abroad. Stricter restrictions on the collection and storage of data have also been introduced.
The Beijing government had previously announced that it would tighten supervision of all foreign-listed companies. For example, after the US IPO of Uber competitor Didi, investigations into the illegal collection of user data were initiated. After years of giving the tech sector a free hand, the Beijing government has been tightening the thumbscrews for some time.
High penalties have already been imposed with reference to market abuse and violations of consumer rights. This crackdown and far-reaching plans have weighed heavily on the share prices of technology companies like Alibaba.
China is also planning an exchange for small and medium-sized enterprises (SMEs) in the capital Beijing. The two most important stock exchanges in mainland China are in the financial metropolis of Shanghai and in the southern city of Shenzhen on the border with Hong Kong. According to insiders, the aim is to attract companies listed abroad with the new stock exchange and to strengthen the international significance of the domestic stock markets.