The Chinese market regulator is blocking the IPO of 42 Chinese companies. The chip division of the significant Chinese car manufacturer BYD, among others, is affected by the blockade.
This is reported by the Chinese news agency Xinhua based on internal documents in the hands of the news agency. These are planned IPOs in Shanghai and Shenzhen. The blockages result from stricter access rules and the prevention of what the regulator calls financial fraud. Last Friday, the regulator announced that it would apply ‘zero tolerance’ regarding market abuse.
Beijing has been trying to get a better grip on business, especially the booming tech sector, for some time. President Xi Jinping does not so much want to make the companies smaller but to have more control throughout the companies. Previously, giants such as Alibaba, Didi and Tencent have been hit hard by stricter regulations and sanctions. It caused their stock prices to plummet.
This week’s lockdowns followed an investigation by the regulator into a number of parties helping the 42 companies with their IPO, including the stock exchange house China Dragon Securities and the law firm Tian Yuan.
The blockade frustrates BYD, among others. The car manufacturer, which mainly focuses on the electric car market, wanted to register its chip division on the Shengzen stock exchange. That should have yielded about 350 million euros to invest in the development of car chips.
In the IPO, BYD is being advised by Tian Yuan, the law firm under scrutiny by the Chinese authority. As a result, the IPO cannot take place (for the time being).