China's new rules on overseas IPOs will apply to Hong Kong, securities regulator says

cnbc.com:

BEIJING — China's forthcoming rules on overseas IPOs will apply to Chinese companies that want to list in Hong Kong, the China Securities Regulatory Commission told CNBC on Friday.

In an exclusive interview with CNBC, the commission's director-general of the international affairs department, Shen Bing, spoke about what draft rules will mean for Chinese companies that are planning to list in the U.S. and other markets following last summer's crackdown.

«By overseas, we mean, of course, you know, anywhere besides mainland China,» Shen said in a wide-ranging interview. «Of course it includes Hong Kong.»

Shen said the rules would apply not only to Chinese companies wanting to offer H-shares in Hong Kong, but also a category called «red chips,» which previously did not need the CSRC's approval. H shares refers to stocks issued by mainland China companies that trade in Hong Kong, and red chips are Hong Kong-trade shares of companies that conduct most of their business in the mainland but are incorporated outside mainland China.

Since July 2021, a rush of Chinese IPOs to the U.S. has dried up. In the last several months, Beijing has overhauled the process for letting domestic companies raise money outside its borders through stock offerings.

One reason cited for the changes is national security, which Washington has also cited when it blacklisted some Chinese companies and moved to reduce U.S. investor exposure to stocks allegedly tied to the Chinese military in the last few years.

From Feb. 15, the increasingly powerful Cyberspace Administration of China will officially require data security reviews for certain companies before they are allowed to list abroad.

The CSRC and the State Council — the top executive body in China —