US Senate Unanimously Passes Anti-China Listing Law

Andrew Cummings
May 22, 2020

The bill, which passed on Wednesday, says that if the Public Company Accounting Oversight Board - a nonprofit established by Congress after the WorldCom and Enron scandals of the early 2000s - is denied access to a foreign stock issuer's books for three years, regulators will prohibit trading in the shares on USA exchanges.

The US Senate passed a bill to delist Alibaba, Baidu and other Chinese companies from US stock exchanges, as tensions between US and China flared up once again.

At issue is China's longstanding refusal to allow the PCAOB to examine audits of firms whose shares trade on the New York Stock Exchange, Nasdaq and other US platforms.

In a sign of broad support for the measure, Representative Brad Sherman, a California Democrat on the House Financial Services Committee, introduced a companion bill in support for the measure and cited the case of Luckin Coffee, a US-listen Chinese company that fabricated its sales.

A bill that could force Chinese companies to give up their listings on American stock exchanges is now moving at "warp speed" in Congress, one analyst says.

"Our basic judgement is, if it's a good company, there are many options for places to list". We're not changing the rules.

Alarm has grown in particular that United States money is bankrolling efforts by Chinese technology giants to develop leading positions in everything from artificial intelligence and autonomous driving to Internet data collection. E-commerce juggernaut Alibaba fell by 0.17 percent, new energy vehicle maker Nio by 5.69 percent and emerging video-sharing platform Bilibili by 7.16 percent. "China is on a glidepath to dominance and is cheating at every turn", Kennedy said in a statement.

"This would definitely drive more Chinese companies to list in the greater China area", said Tianjun Wu, deputy economist at the Economist Intelligence Unit.

"This trend should help retain and attract more capital inflow into the Hong Kong market in the long run and help strengthen a more Asia-based trading and investment base for Chinese companies", Morgan Stanley wrote.

However, cross-border securities supervision and inspection of Chinese companies should be carried out by the China Securities Regulatory Commission based on Chinese laws and regulations.

As per the Bill, the USA can also impose sanctions on individuals responsible for human rights violations in Hong Kong. "The Chinese government forbids that kind of transparency".

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