China is making it harder for Mom and Pop to access U.S. stocks. Here's who will benefit

Visitors walk by a large Chinese national flag painted on the side of a container at an outdoor market during the Golden Week holiday in Beijing, China, on Oct. 3, 2024. Kevin Frayer | Getty Images China is making it harder for retail investors to steer money to U.S. stocks, ramping up a longer-term shift that steers domestic capital and companies toward Hong Kong. Beijing's securities regulator recently tightened scrutiny on offshore brokerages , saying it will "resolutely crack down" on Tiger Brokers, Futu Holdings and Longbridge Securities over what it described as illegal cross-border securities operations. It's the latest salvo in a years-long effort to close loopholes that allowed mainland investors to access overseas markets outside formal channels. The change "may potentially reduce funds to ADRs listed in the U.S.," said Vey-Sern Ling, senior equity advisor at Union Bancaire Privée. "Hong Kong listings may therefore become more attractive if the company is eligible for Stock Connect," a program which allows mainland Chinese to invest in some Hong Kong-listed stocks via their local brokerages. The latest move comes as Beijing intensifies a broader cleanup of China's financial sector under securities regulator Wu Qing, while simultaneously tightening oversight over cross-border capital flows and financial risk. While the crackdown has revived concerns over foreign access to Chinese markets, analysts broadly downplayed the impact on global investors and liquidity. …