How much is the impact of the plunge in Chinas capital stocks?

category:Finance
 How much is the impact of the plunge in Chinas capital stocks?


According to the requirements of the act, if a foreign issuer fails to meet the inspection requirements of the public company accounting oversight board (PCAOB) for three consecutive years, its securities are prohibited from trading in the United States. The bill was passed in the US Senate in May this year.

Although the law applies to companies in any country, it is aimed at companies such as Alibaba, technology company pinduoduo and oil giant PetroChina Co Ltd., Reuters reported. After hours, pinduoduo, Weilai and other stocks in the diving market. So, how big is the impact?

The U.S. House of Representatives voted on Wednesday to pass the foreign company Accountability Act, which requires foreign issuers who fail to meet the requirements of the public company accounting oversight board (PCAOB) for three consecutive years to prohibit their securities from trading in the United States. The bill was passed in the US Senate in May this year.

The bill is widely supported by Republicans and Democrats. It has been expected that the U.S. House of representatives will pass legislation this week. Reuters reported that the legislation may prevent some Chinese companies from listing on U.S. exchanges unless the companies comply with U.S. auditing standards.

Later, the White House also said that President Donald Trump was expected to sign a bill that could prevent some Chinese companies from listing on U.S. exchanges unless they comply with U.S. auditing standards.

The securities and Exchange Commission (SEC) is pushing ahead with a plan that could lead to the delisting of some Chinese companies listed in the United States, according to a report on November 17 by the securities and Exchange Commission. According to people familiar with the matter, the US Securities Regulatory Commission will recommend that the exchange be responsible for requiring Chinese companies to comply with the audit verification in the United States, or prohibit listing or request delisting.

China Securities Regulatory Commission responded earlier

The head of the relevant departments of the CSRC said that the act requires that foreign issuers who fail to meet the inspection requirements of the public company accounting oversight board (PCAOB) on accounting firms for three consecutive years shall be prohibited from trading their securities in the United States. In this regard, we believe that the bill completely ignores the fact that the Chinese and US regulators have been working hard to strengthen audit supervision cooperation for a long time. China has always attached great importance to China US cooperation in capital market audit supervision. In 2017, China assisted PCAOB to carry out a pilot inspection on a Chinese accounting firm. Since 2019, China has repeatedly proposed to PCAOB specific proposals for joint inspection of accounting firms. We look forward to a positive response from US regulators and call on both sides to speed up the joint inspection of relevant accounting firms through equal and friendly consultation and in accordance with the international practice of cross-border audit regulatory cooperation.

The bill will damage the interests of both sides. It will not only hinder foreign companies from listing in the United States, but also weaken global investors confidence in the US capital market and its international status. High quality listed companies are important resources for competition in capital markets of various countries. I believe that international investors will make their own wise choices according to their own best interests.

At a regular press conference held by the foreign ministry on December 2, a reporter asked: it is reported that the US House of Representatives may pass a bill on restricting the listing of Chinese companies in the United States this week. Whats your comment?

I think the issue you mentioned just now shows once again that the United States has adopted a discriminatory policy against Chinese companies, which is a political crackdown on Chinese enterprises.

We firmly oppose the politicization of securities regulation. We hope that the US side can provide a fair and just environment for foreign enterprises to invest and operate in the United States, instead of trying to set up barriers at all levels.

Will accountability of foreign companies be passed

On the evening of December 2 local time, the house of representatives of the United States passed the holding foreign companies accounting act. The act requires that foreign issuers who fail to meet the inspection requirements of the public company accounting oversight board (PCAOB) for three consecutive years will be prohibited from trading their securities in the United States. The act also requires listed companies to disclose whether they are owned or controlled by foreign governments.

The move means that China capital stock companies, including Alibaba, Baidu and Jingdong, will have three years to comply with the above provisions, or withdraw from the US stock market if not.

According to statistics, as of October this year, 217 Chinese companies listed on the US stock market, with a total market value of 2.2 trillion US dollars.

Interestingly, investors in the US equity capital markets reacted calmly to the news. After hours, Alibaba shares rose 0.7%, pinduoduo fell 0.8%. Since the beginning of this year, Alibaba has risen by 23%, pinduoduo has increased by 280%, and Weilai automobile has increased by 1094%.

Brendan Ahern, chief investment officer of kraneshars, said in an exclusive interview with first finance reporter that China and the United States will resolve their differences through dialogue and cooperation.

The [U.S. government] does not want to joke about another $2.2 trillion investment at the height of the recession, he laughs. The broad delisting of China capital stocks will damage the status of the US as a global financial center.

On August 26, Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said in an interview with Bloomberg that Chinas attitude in solving the cross-border accounting supervision issues between China and the United States is sincere. The CSRC has proposed a new plan to the public company accounting oversight board (PCAOB) of the United States at the beginning of this month to allow the United States to select any state-owned Chinese company for the second pilot joint inspection. However, the premise of this pilot inspection is that the CSRC will desensitize audit working papers for the sake of national security. These problems are becoming more and more urgent. We are very sincere, but on the other hand, we also attach great importance to protecting information related to national security, Fang said

Ahern believes that for a long time, American media reports have focused on the risk of general stocks in investment, and rarely mentioned the relevant rich returns. He took Netease as an example, which was listed in the United States on June 29, 2000, with a cumulative increase of 13335%. Compared with this, Amazon rose 8573% in the same period. The return on investing in most of the stocks is much higher than that on some bad apples, he concluded According to Ernst & Young data, as of the end of September this year, 24 Chinese companies have landed on the US stock market, accounting for half of the cross-border listing of US stocks. On October 30, lufax, a Chinese financial technology company, landed on the New York Stock Exchange and raised $2.36 billion. Ahern said that the successful listing of China concept stocks such as shell and lufax shows that both its investment banks and investors believe that the possibility of China capital stock withdrawing from the US stock market is low.

Ahern believes that for a long time, American media reports have focused on the risk of general stocks in investment, and rarely mentioned the relevant rich returns. He took Netease as an example, which was listed in the United States on June 29, 2000, with a cumulative increase of 13335%. Compared with this, Amazon rose 8573% in the same period.

According to Ernst & Young data, as of the end of September this year, 24 Chinese companies have landed on the US stock market, accounting for half of the cross-border listing of US stocks. On October 30, lufax, a Chinese financial technology company, landed on the New York Stock Exchange and raised $2.36 billion.

Ahern said that the successful listing of China concept stocks such as shell and lufax shows that both its investment banks and investors believe that the possibility of China capital stock withdrawing from the US stock market is low.

The US House of Representatives passed the foreign company Accountability Act