Just months after bankers celebrated a record haul from taking Chinese companies public in New York and Hong Kong, they’ve had a rude awakening. Deals are being shelved and investors are nursing heavy losses.
A chill has settled over global finance after a fortnight in which China first cracked down on its Uber-like Didi Global Inc. within days of a U.S. trading debut, followed swiftly by the State Council announcing closer scrutiny of all offshore listings. On Saturday, a cybersecurity review was proposed for companies with data on more than 1 million users before they seek to list in foreign countries.
The warning signs had been flashing for a while. As underwriters totted up a record $1.5 billion in fees last year from helping Chinese firms with initial public offerings offshore, relations between China and the U.S. were at a low ebb. In December, then-U.S. President Donald Trump signed a bill that could delist Chinese companies that don’t meet audit inspection rules. Simultaneously, Chinese President Xi Jinping stepped up oversight of big technology firms, partly to secure the treasure trove of data they control.
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