Chinese authorities have reportedly slammed the door on their citizens' ability to invest in U.S. stocks, just as the IPO hype around SpaceX and Anthropic reaches a fever pitch.
The China Securities Regulatory Commission (CSRC) has mandated that investors can only buy overseas stocks through official channels, according to a report from the Financial Times on Tuesday. The move comes after the CSRC fined three companies for allowing Chinese investors to purchase overseas stocks through a loophole. Hong Kong authorities have also initiated reviews of 12 other firms. Now, investors are only allowed to sell assets and withdraw funds from these brokers for the next two years—no new purchases allowed.
The three brokerages that got slapped with fines were Futu Holdings (FUTU), Tiger Brokers (TIGR), and Longbridge. Their U.S.-listed shares initially dropped nearly 30% on the news but have since recovered. All three have promised to play by the new rules.
Citic Securities estimates that up to $32 billion in mainland Chinese investor assets could be caught up in the restrictions, as brokers in China and Hong Kong tighten compliance for accounts investing in overseas equities.
This regulatory crackdown comes at a particularly awkward time. SpaceX just announced plans for a $75 billion IPO, selling 555.6 million shares at $135 each. Anthropic is also reportedly gearing up for a public offering. Chinese retail investors, who account for over 85% of the country's QDII mutual fund investments, have been piling into U.S. tech stocks. Investments in China's QDII mutual funds have more than tripled over the past two years to CNY 372.9 billion ($55 billion).
The CSRC didn't immediately respond to requests for comment.
