Bill Passed to Delist Chinese Companies from US Stock Exchanges
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The
US Senate on May 20 approved the legislation that will bar the Chinese
companies from being listed on the stock exchanges of United States. It all
happened due to increasingly tense relations between the world’s two largest economies.
A Republican senator from Louisiana, John
Kennedy, and Democrat senator, Chris Van Hollen from Maryland jointly
introduced the Bill. It was however approved by unanimous consent and would
require companies to certify that they are not under the control of a foreign government.
Shares in some of the biggest U.S. listed
Chinese firms, including Baidu and Alibaba, slid Thursday in New York while the
broader market gained. In case, a company fails to show that it is not under
such control or the Public Company Accounting Oversight Board, or PCAOB, isn’t
able to audit the company for three consecutive years to determine that it is
not under the control of a foreign government, the company’s securities would
be banned from the exchanges. Kennedy said on the Senate floor that he did not
want to get into a new Cold War.
Van Hollen, in a statement, said,
“Publicly listed companies should all be held to the same standards, and this
bill makes common sense changes to level the playing field and give investors
the transparency they need to make informed decisions”. The Bill could
potentially affect the future listing plans of major private Chinese
corporations from Jack Ma’s Ant Financial to SoftBank-backed ByteDance Ltd.
Beijing-based analyst and portfolio manager with Hullx, James Hull said, “Since discussions on increased disclosure requirements began last year, many other Chinese companies have either listed in Hong Kong. China and the U.S. have been at odds on the issue even as companies including Alibaba and Baidu have raised billions of dollars selling shares in American markets. The long-simmering feud came to the forefront last year as Washington and Beijing clashed over broader trade and economic issues, and some in the White House have been urging Trump to take a harder line on the audit inspections.
