According to a recent Reuters story, two Chinese stock exchanges have halted more than 40 planned initial public offerings as China’s securities regulator investigates intermediaries.
According to filings seen by Reuters, the Shanghai and Shenzhen stock exchanges have allegedly stopped around 40 joint IPOs in the previous week. The firms range from producers of gas engines and circuit breakers to medical technology and semiconductors.
The hold is due to a pending probe by China’s securities regulator into four accounting and legal companies that assist in the IPO process, according to the exchanges.
According to another Reuters article, while the IPO stop appears to have started days ago, China’s State Council announced on Monday that it will intensify its fight on false accounting and auditing, accusing accounting companies of allowing forgeries. Similarly, the securities regulator said over the weekend that it will begin requiring higher-quality IPO filings.
The increased scrutiny of initial public offerings is just the newest front in China’s increased regulatory assault against a wide range of local sectors, from tutoring to big tech. According to Reuters, the securities regulator also stated that it will explore collaboration with America on auditing oversight.
The Securities and Exchange Commission attempted to execute new legislation in March that would require US-listed foreign companies – primarily Chinese companies – to reveal their audits to American authorities or face being delisted.
In July, the Securities and Exchange Commission (SEC) suspended Chinese stock listings in the United States while it investigated what disclosures should be made to safeguard investors. The emphasis of scrutiny has been on opaque structures known as variable interest companies, which are frequently utilized to conduct Chinese IPOs in the United States.
China investigating Alibaba home city officials
Hangzhou’s top government official is being investigated in China for major disciplinary infractions, bringing attention to the city that is home to Jack Ma’s Ant Group Co. and Alibaba Group Holding Ltd.
The Central Commission for Discipline Inspection said Saturday that Hangzhou Municipal Party Committee Secretary Zhou Jiangyong, 53, has been placed under investigation for severe breaches of party discipline and state law. While the agency did not go into detail about Zhou’s alleged crimes, such wording is frequently used by the party watchdog to characterize corruption investigations.
Hangzhou’s Municipal Standing Committee convened a meeting on Saturday following the news of the investigation into Zhou, reaffirming its commitment to anti-corruption and responsible governance. The city will launch an effort to weed out improper government-business connections, according to a separate CCDI statement.
According to an article from Chnfund that was published in the Paper, part of the state-backed Shanghai United Media Group, over the weekend, Zhou’s family acquired shares in a fintech firm ahead of its initial public offering in November, before the listing plans were canceled.
On Monday, Alibaba dropped 3.7 percent in Hong Kong, despite other technology stocks rising.