CHINA’S securities regulator is investigating concerns over speculative buying linked to buyouts of foreign-listed Chinese companies aimed at relisting them on domestic exchanges.

    This is potentially bad news for tech firms trying to come home and cash in on high valuations.

    The valuation gap between the domestic and overseas market and speculation on shell companies should be paid attention to, Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), said at a weekly briefing Friday.

    The CSRC “will launch an in-depth analysis and research on similar companies’ return to domestic markets via initial public offerings, mergers and acquisitions as well as restructuring,” Zhang said.

    The CSRC made the comments following rumors that it would block domestic listings by firms currently listed overseas, Shanghai Securities News reported.

    “For companies already in the process of relisting at home, the faster they get done the better because regulatory uncertainties are rising,” said a banker, who declined to be identified.

    “We may also suggest that some clients opt for the new third board, given that there are fewer regulatory hurdles.”

    Several founders of U.S.-listed Chinese companies are in the process of closing buyout deals backed by funds from domestic investors who have been promised huge returns when the companies relist on China’s own stock markets.

    Since 2015, 37 U.S.-listed Chinese companies have received US$38.9 billion in buyout offers, according to Dealogic. Five formerly overseas-listed companies have relisted in the domestic equity market through merger deals over the past three years, according to the CSRC.

    Chinese stocks that trade in the United States are valued at a median forward price-to-earnings ratio of 16, compared with a multiple of 57 for companies listed on exchanges in Shanghai and Shenzhen. (SD-Agencies)