A vehicle from the electric car maker NIO stands outside the New York Stock Exchange (NYSE) in New York City on September 12, 2018.
Drew Angerer | Getty Images News | Getty Images
China will continue to allow Chinese companies to go public in the US as long as they meet listing requirements, China’s securities regulator told brokers late Wednesday, according to a source familiar with the matter.
A number of regulatory measures in recent weeks have heightened investor concerns that Beijing is trying to block foreign capital flows into Chinese assets.
Cross-border listing can also be done using the floating rate structure, the source said, citing the regulator. It refers to a legal structure that allows international investors to access shares of Chinese companies in the United States
The regulator recognized that the structure is an important way for companies to attract foreign capital, but said it needed to be adjusted if there were national security concerns, the source said, requesting anonymity due to the sensitivity of the matter.
The vice chairman of China’s securities regulator, Fang Xinghai, held a virtual meeting with major investment banks on Wednesday, the source said. This was followed by days of heavy selling of Chinese stocks amid fears of increased regulatory crackdown by Beijing.
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The policy explicitly forbade notifying companies to raise money on the stock exchange or to have foreign investors, particularly through the legal structure of variable rate companies that give international investors access to Chinese stocks.
The speed and breadth of politics surprised many. Goldman Sachs downgraded Chinese education stocks on Monday as the post-school tutoring market was expected to “shrink significantly” – to less than a quarter of its current $ 106 billion.
However, Fang of the Securities Commission said the policy was aimed at easing the burden on parents – rather than discouraging foreign investment – and would give education companies as much time as needed to restructure, according to the source.
The Securities Commission did not immediately respond to a CNBC request for comment.