‘Trump may delist Chinese firms from US markets’
WASHINGTON: President Donald Trump’s administration is considering delisting Chinese companies from US stock exchanges, three sources briefed on the matter said on Friday, in what would be a radical escalation of Us-china trade tensions.
The move would be part of a broader effort to limit US investment in Chinese companies, two of the sources said. One said it was motivated by the Trump administration’s growing security concerns about the companies’ activities.
Major US stock indexes slipped on the news, which came days before China celebrates the 70th anniversary of the birth of the People’s Republic on 1 October, when the world’s No. 2 economy will shut down for a week of festivities.
Shares of Hangzhou, Zhejiang-based Alibaba ended down 5.15%. Jd.com fell 5.95% and Baidu Inc declined 3.67%. The ishares China Large-cap ETF shed 1.15%.
Shares of New York Stock Exchange-owner Intercontinental Exchange Inc ended down 1.88% and shares of Nasdaq Inc declined 1.70%.
It was not immediately clear how any delisting would work. In June, U.S. lawmakers from both parties introduced a bill to force Chinese companies listed on American stock exchanges to submit to regulatory oversight, including providing access to audits, or face delisting.
Chinese authorities have long been reluctant to let overseas regulators inspect local accounting firms—including member firms of the Big Four international accounting networks—citing national security concerns.
“Beijing should no longer be allowed to shield Us-listed Chinese companies from complying with American laws and regulations for financial transparency and accountability,” Republican Senator Marco Rubio said at the time.
One of the sources briefed on the matter said the idea of delisting was the latest salvo in this longstanding dispute.
“This is a very high priority for the administration. Chinese companies not complying with the Public Company Accounting Oversight Board (PCAOB) process poses risks to US investors,” the source said.
Any plan is subject to approval by Trump, who has given the green light to the discussion, Bloomberg reported here citing a person close to the deliberations.
Officials are also examining how the United States could put limits on Chinese companies included in stock indexes managed by U.S. firms, the agency cited three sources as saying.
No decision or action is imminent, two sources familiar with the discussions told.
As of February, 156 Chinese companies were listed on the NASDAQ and New York Stock Exchanges, according to US government data, including at least 11 state-owned firms.
NYSE declined to comment on Friday, while Nasdaq, MSCI, S&P and FTSE Russell did not immediately respond to requests for comment.
China’s yuan currency, traded in offshore markets CNH=, fell against the dollar after the news to trade near its weakest against the greenback in about three weeks. Indian markets have seen a huge positive swing after Finance Minister Nirmala Sitharaman’s booster dose for India Inc in the form of a massive corporate tax cut. Markets gave a huge thumbsup, rallying the most in the last decade. Sitharaman’s decision to cut taxes to bring the country in line with Asian peers was aimed at rolling out the red carpet for global investors and leaving more money with domestic companies for investments.
Since then, Indian bourses are clearly in a bullish territory (though it is impossible to predict the markets perfectly). The equity markets ended this week firmly in the green, adding over 950 points and for companies like BPCL, it has been their best week in nine years. For Siemens, it has been its best week in five years, indicating the shift in the sentiment of investors and their view on India.
While most analysts believe India may be back on the trajectory of the $5 trillion economy—an ambitious target that needs North Block to continue its reform measures—the near term depends on a series of data points.
Firstly, the second quarter results for India Inc will give a sense of how soon the measures announced by the Finance Minister will lead to a turnaround. Nearly half of Nifty 50 companies had
GAURIE DWIVEDI