Chinese regulators have held talks with global financial institutions to ease nervousness over Beijing crackdown, report says

The Great Palace of the People at night, located on the east side of Tiananmen Square
  • The Chinese securities regulator has met with major financial institutions, according to the FT.
  • Chinese regulators didn’t expect the regulatory hardline to scare investors so much, one person said on the call.
  • Chinese stocks listed in Hong Kong received a boost, but one trader had doubts: “Is there any conviction behind this? No, not really.”
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China’s securities regulator on Wednesday met with major financial institutions, including BlackRock, Fidelity and JPMorgan, to try to allay fears that Beijing is cracking down on Chinese companies listed in the United States, according to a new report from the Financial Times. .

The meeting, chaired by China Securities Regulatory Commission Vice Chairman Fang Xinghai, attempted to reassure U.S. institutional investors that China was proceeding as usual. In particular, Fang told U.S. attendees that Beijing’s hard line on private tutoring companies was a one-off situation, according to a source in the meeting who spoke with the FT.

Chinese regulators didn’t expect their crackdown – which earned shares in Didi Chuxing ridesharing before spreading to private guardians and other industries – to scare investors as much as it did the person said on the call.

After the first report of the call, Chinese stocks listed in Hong Kong received a much needed boost, pushing up the Hang Seng tech index by 8%.

However, many participants were not reassured. Commenting on Hang Seng’s rebound, a trader at a Chinese brokerage firm told the FT, “Is there any conviction behind this? Not really.

A continuing source of concern is the structure of the VIE business. VIE, short for variable interest entity, is a legally unrecognized workaround that allows Chinese companies to register overseas.

Questions about whether VIEs would be allowed in the future have “not received a definitive answer,” a source told the FT.

“The Chinese government is not completely deaf to the sentiment of international investors,” one person said on the call. “These policies do not come from the CSRC, they come from much higher. It is clear that there will be more to come, it is obvious to everyone,” they added.


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Marianne R. Winn

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