China’s securities regulator has clamped down on small companies’ listings on New York stock exchanges after many of them became vehicles for price-rigging, causing heavy losses for US investors.
The rate of China-approved applications for US initial public offerings has slowed noticeably in the past year, falling from 22 in the first half of 2024 to 11 since June. Four people close to the China Securities Regulatory Commission said it intends to impose “tighter control” this year over US IPOs of Chinese companies with small capitalisation and weak fundamentals, viewing them as prone to market manipulation.
The CSRC was concerned about whether these small-cap companies listed in the US truly need to raise funds. “Not only the Chinese regulators but also other market participants have questioned why these firms require offshore listings,” said a person familiar with the CSRC’s latest thinking.