china continues to roll out more regulation targeting a range of technology companies but that hasn’t stopped sensetime one of china’s most valuable startups from filing to go public in hong kong it’s unclear whether the artificial intelligence company is trying to test regulators or if it has already gotten beijing’s approval but us investors may want to sit this one out sensetime which has been under scrutiny because of its facial recognition technology and use in masssurveillance systems is on the us commerce department’s export restriction list with the department citing the company’s role in the repression of muslim minorities in xinjiang while the company isn’t on a separate list from the treasury department of companies linked to china’s military that us investors are prohibited from investing in it could be soon says stephen myrow a former senior treasury official who is now managing partner at beacon policy advisors not putting the company on the other list myrow says could raise the perception of a possible loophole if it is placed on the treasury list us investors would be prohibited from owning even the hong kong shares the ipo filing from sensetime whose investors include softbank comes as chinese regulators tighten controls on companies especially those involved with sensitive data that raises other questions like whether china’s regulators gave the filing their blessing as beijing tries to woo more chinese technology companies to list in hong kong “they are under a lot of pressure from investors to do the ipo but face a much more complicated regulatory landscape than one year ago” says paul triolo who heads global technology policy at eurasia group and thinks the company likely has gotten the goahead from regulators “but valuation is really high given the profitability of the company and limits likely on how much it can expand outside of china” in midmay the wall street journal reported that the company was testing the waters for a 1 billion offering but a lot has changed in recent months as beijing’s regulatory drive has intensified beijing has been putting increasing focus on reducing its dependence on the us and others—and one way it is doing that is to bolster its own capital markets and woo more companies to list in hong kong that effort has been aided by increasing scrutiny in the us of chinese companies as well as the chaos that ensued after the public offering of didi global ticker didi whose shares careened after its us debut when chinese regulators opened an investigation the sharp selloff in chinese stocks has also cooled investor interest as the flow of new regulatory measures continues beijing for example just banned online videogames during the week for those under 18 limiting their access to games to just three hours a week on weekends and holidays tencent holdings 700hong kong had preemptively put in some restrictions though the ban is even more stringent minors make up a tiny fraction of tencent’s gaming revenue shares of tencent closed slightly down overnight at hk46580 but shares of netease ntes fell 35 to 8956 on monday the moves come as part of a broader set of regulations aimed at creating a more level playing field and getting better control over data but also a larger objective focused on social issues and equality that money managers are trying to grapple with and that is a reason some money managers are channeling investors who focus a lot on environmental social and governance factors “we are paying more attention to the social impact and risk of companies” says pradipta chakrabortty a fund manager at harding loevner that is not to say there aren’t risks with chakrabortty noting that it isn’t clear how regulations could affect industry dynamics and nearterm prospects for companies like tencent but it isn’t enough to dissuade him from hunting in china “china is a big market not just from consumption but also with value chains for manufacturing components there are attractive businesses with significant growth opportunity at a point of inflection toward even higher growth” he says tapping that growth though will require a strong stomach for the continued stream of regulation still expected