US bill to delist Chinese companies from stock exchanges not a major concern for Chinese tech firms: experts

By Qi Xijia Source: Global Times Published: 2020/12/3 14:03:40

US stock market xinhua

The US House of Representatives passed a bill Tuesday that could prevent more Chinese companies from listing in US capital markets amid efforts by US regulators to crack down on Chinese firms.

The move is not a major concern for Chinese firms but would further harm the reputation of the US as an international capital market, experts said.

Titled "The Holding Foreign Companies Accountable Act" the measure would force foreign companies to adhere to US securities law while some of the Act's content explicitly targets China.

It bars the securities from foreign companies from being listed on any US exchange if they have failed to comply with the US Public Accounting Oversight Board's (PCAOB) audits for three years in a row.

The bill may not shake the momentum of Chinese tech giants listed in the US including Alibaba, Baidu and Pinduoduo, companies the US market cannot afford to lose, Dong Dengxin, Director of the Finance and Securities Institute at the Wuhan University of Science and Technology, told the Global Times on Thursday.

"These large companies may try to adapt to US stock market rules by working with international accountancy firms," Dong said.

However he noted that some small US-listed Chinese companies, such as those valued at less than $100 million, will be more likely to delist as auditing costs rise. 

A document issued by the US -China Economic and Security Review Commission, as of October 2 showed 217 Chinese companies listed on the three major US exchanges with a total market value of $2.2 trillion.

"Chinese companies make up most of the foreign entities listed in the US and these exchanges cannot live up to their name without these Chinese technology companies," Dong said.

Since the bill was passed by the Senate in May, nine Chinese stocks have sought a second-listing in Hong Kong, including and NetEase and more are expected to return to domestic market after the bill was passed by the House, experts said.

The bill is likely to be sent to President Trump who the White House said is expected to sign it into law, according to the Reuters.

However, it remained uncertain whether the Biden administration would overturn Trump's tough attack on Chinese companies listed in the US, Dong said.

"After Biden takes office, the attack on Chinese companies may not be as direct and tough as they have been under Trump. It is possible for Biden to overturn some bills and policies, reducing pressure on Chinese companies based on claims by the Democratic Party that they plan to encourage globalization, meaning more open markets and free trade," Dong said.

Posted in: ECONOMY

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