China’s Securities Regulatory Commission announced last Friday a long list of updated guidelines for fintech companies seeking to be listed on its Shanghai Stock Exchange’s STAR market, the Nasdaq-style tech board officially known as the Shanghai Stock Exchange Science and Technology Innovation Board. One of the major guidelines that financial technology companies were banned from listing on the Nasdaq-like exchange. “Real estate and firms mainly engaged in financial services and investment businesses are prohibited from listing on the Science and Technology Innovation Board,” the CSRC said in the release.
This comes a few months after the sudden suspension of Ant Group’s highly anticipated dual listing and JD.com’s withdrawal of its planned listing of its financial technology arm on the STAR market and is showing other Chinese fintech firms just how difficult it’s becoming to go public in China.
According to EY’s Asia-Pacific IPO leader, Ringo Choi, few firms in the fintech sector have managed to list on mainland exchanges in Shanghai and Shenzhen. “For financial technology, you can see that … some of the largest one(s), if they’re competing with the bank or insurance company, they will have a hard time,” Choi told CNBC in an interview.
The current Initial Public Offering climate has done a complete 180 from the situation just six months ago when a mass of Chinese start-ups were looking to list domestically. The Alibaba listing mentioned earlier was poised to be the largest IPO of all time. It was shelved days before the debut after top executives including its founder and controller, Jack Ma, were summoned by Chinese regulators for questioning.
These abrupt and unexpected suspensions have largely been the mark of a turning point in Beijing’s stance toward its domestic technology giants which include fintech firms, which before had enjoyed unencumbered growth for years. “The sentiment for this sector face(s) some questions,” Bruce Pang, head of macro and strategy research at China Renaissance Securities in Hong Kong, told CNBC in an interview. He said firms in the financial technology sector are now looking toward Ant’s “rectifications” of its business as an “example” for others that are looking to list on the mainland.
Huang, Eustance. “China’s Fintech Giants Are Hitting Roadblocks in Planned Listings at Home.” CNBC, 23 Apr. 2021, www.cnbc.com/2021/04/23/chinas-fintech-giants-are-hitting-roadblocks-in-planned-listings-at-home.html.