China’s most powerful companies — including Didi, Alibaba and Tencent — are suddenly under immense pressure as China vows to crack down on domestic companies that list on U.S. exchanges. That move could upend a $2 trillion market loved by some of the biggest American investors and once again proving that the Chinese government doesn’t like sharing with anyone or anything with even the remote idea of self-independence.
Beijing is stepping up its oversight on the flood of Chinese listings in the U.S., which are overwhelmingly tech companies. The State Council said in a statement Tuesday that the rules of “the overseas listing system for domestic enterprises” will be updated, while it will also tighten restrictions on cross-border data flows and security.
The crackdown on tech is not a new trend. But because the nation has the ability to move quickly, any action could wreak havoc in major areas on Wall Street. Market analysts say it could not only threaten the IPOs in the pipeline, but it could also pressure the popular Chinese ADR market.
One thing is for sure if you own any Chinese stock it looks like its going to be a bumpy ride so just make sure you’ve got you parachute, life jacket and water raft ready because its going to get rough if the Chinese government pulls out of the U.S. exchanges.