(Reuters) – China is increasing its scrutiny of overseas investments by domestic companies and their use of proceeds from Hong Kong share sales, after record capital outflows put pressure on the yuan, Bloomberg News reported on Tuesday.
China’s yuan has weakened recently against the dollar, pressured by renewed investor worries over tensions between the world’s two largest economies and uncertainty around U.S. tariffs on Chinese exports.
Authorities have asked China-incorporated firms planning initial public offerings or second share sales in Hong Kong to get a “no objection” indication from the State Administration of Foreign Exchange (SAFE) if they want to deploy the proceeds overseas, the report said, citing people familiar with the matter.
Bloomberg added that Chinese firms that are not able to secure an indication have been told by officials to repatriate their proceeds to mainland China.
Separately, the report added that regulators have begun to more closely examine the money that companies send offshore in the name of overseas direct investment.
The move comes after Chinese companies, mainly those in the tech sector, are accelerating plans to raise funds offshore.
A Reuters request to comment on the Bloomberg report was received by SAFE, it said, while a phone call to China’s Ministry of Commerce remained unanswered.
IPOs by Chinese companies, particularly in Hong Kong, are also expected to pick up pace in the coming years, with 29 new applications being filed in Hong Kong in January versus 15 in the same period last year.
(Reporting by Ojasvi Gupta in Bengaluru; Editing by Vijay Kishore)
