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Summary
- The growing tussle between the US and China is now making inroads to capitalism.
- US policymakers had also enacted laws to make it harder for overseas companies to raise funds in the US.
The United States is intensifying its crackdown on Chinese companies listed on the US-based stock exchanges as three Chinese telcos are set to delist.
Source © Kalkine Group 2020
Overseas companies can list their shares on the US stock exchanges through American Depository Receipts (ADRs), which has allowed many global companies, including the likes of Alibaba, Vale SA, POSCO, Taiwan Semiconductor, and ASML to raise funds in the US markets.
US policymakers had been critical of dubious Chinese firms listed on its stock exchanges. Last year, the Senate passed the Holding Foreign Companies Accountable Act, which was later passed by the House of Representatives and signed by President Donald Trump.
Source © Kalkine Group 2020
The new laws make it harder for companies to list their shares on the US exchanges. They include stricter audit controls, which ensure that foreign firms' audit standards are on par with those applied to the US companies.
Foreign companies will now have to disclose if a foreign government controls them. When the US President signed the bill, the Chinese government said the move would hurt global investors’ confidence.
As relations have deteriorated between the US and China, Chinese firms, including Yum China, NetEase, Alibaba, have listed their shares in Hong Kong.
On New Year’s Eve, the New York Stock Exchange reported that China Telecom Corporation Limited, China Mobile Limited, and China Unicom Hong Kong Limited, would be delisted from the stock exchange anytime between January 7 and January 11.
Source © Kalkine Group 2020
The move is the result of an executive order signed by Trump, which bars US investments in companies that are deemed ‘Communist Chinese military companies’ by the US Department of Defence.
