China cracks down on cross-border stock trading

Worried about “hot money” outflows, Chinese regulators are cracking down on illegal cross-border stock trading.

The move — in which officials have targeted brokerages offering investors an easier and cheaper way to get capital out of China than through official channels — has already hit Chinese mainland companies listed on overseas exchanges.

It is also likely to ricochet through Hong Kong’s booming market for IPOs, though a Citic Securities analyst said the rule’s short-term impact on the Asian financial hub was “manageable.” Experts say the crackdown is partly intended to give Chinese authorities greater visibility into overseas stock trading by Chinese nationals so they can tax profits amid a slump in government revenues caused partly by a real estate crash.