Chinese companies free to choose listing venues, but must obey laws


© Reuters. FILE PHOTO: A Chinese national flag flutters near the building of China Securities Regulatory Commission (CSRC) at the Financial Street area in Beijing, China July 16, 2020. REUTERS/Tingshu Wang

SHANGHAI (Reuters) – China’s top securities regulator said on Thursday that Chinese companies are free to choose their listing locations but they must abide by local laws and regulations.

Yi Huiman, chairman of the China Securities Regulatory Commission (CSRC), also called for closer cooperation among global watchdogs on law enforcement.

“Some companies want to list overseas, and some overseas-listed companies are willing to come home. This is natural phenomenon, and we’re generally supportive to both,” Yi told a financial forum in Shanghai.

“Wherever companies list, they must … respect the law, and respect investors.”

A growing number of U.S.-listed Chinese companies are conducting secondary listings in Hong Kong, as U.S. regulators threaten to remove them from American exchanges unless they meet U.S. auditing requirements in three years.

Meanwhile, some cases of fraud by Chinese companies had dented investor confidence in U.S.-listed Chinese firms.

“Global regulatory bodies need to strengthen cooperation in law enforcement … and join forces in cracking down on illegal behaviors,” Yi said.

He brushed aside concern that China was tightening domestic initial public offerings (IPOs).

“We think that there’s no tightening, or loosening,” Yi said, citing data showing a 37% rise in domestic IPO fundraising during the first five months of the year.

What Chinese regulators had done was merely to tighten scrutiny on underwriters and raise the bar for tech listings, in a bid to prevent reckless capital expansion, he said.

In the commodities market, Yi said that global liquidity excesses, economic imbalances, and the demand-supply gap had colluded to push up commodity prices, making risk hedging important.

Yi urged global compilers of commodity price benchmarks to improve the way they make indexes.

“We call on relevant international organisations to set up a more rigid and scientific index-compiling mechanism,” he told the conference.

That would “improve the efficiency of price discovery, which is conductive to the stability and safety of the global value chain”.

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