Why Are Alibaba Shares Down In Premarket Today?

The Wall Street Journal reports that China's new rules seek to forbid companies with large amounts of sensitive consumer data from going public in the U.S.
China Securities Regulatory Commission aims to restrain the complex corporate structures used by the Chinese companies to bypass restrictions on foreign investment. Meanwhile, the U.S. is also getting stricter with the overseas IPO norms.
Chinese technology giants, including Alibaba Group Holding Ltd, DiDi Global Inc DIDI, Baidu Inc BIDU, and Tencent Holdings Ltd TCEHY, had resorted to the Variable Interest Entity structure to list offshore, Bloomberg reports.
China proposes establishing a mechanism requiring companies to obtain formal approval for overseas IPOs from a cross-ministry committee. The committee will include members from the CSRC, China's internet watchdog, and other ministries.
China aims to implement the new rules during the fourth quarter. It has restricted companies from pursuing overseas listing, casting doubts over Alibaba-backed Ant Group and the ByteDance Ltd-owned TikTok's IPOs.
Sectors with less sensitive information like pharmaceuticals remain likely to win approval for an IPO.
Price Action: BABA shares traded lower by 2.82% at $160.58 in the premarket session on the last check Friday.