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It was one of the few wrinkles during what was an exceptional year for Wall Street.
Just days after the Chinese ride-hailing app Didi made its stock market debut, in what was the biggest flotation of a Chinese company since Alibaba in 2014, Beijing launched a crackdown on its tech sector.
Shares of Didi and other Chinese tech companies fell sharply and investor confidence was severely rattled.
Amid a general deterioration in Sino-US relations, tensions flared in particular over a law passed by US Congress in May 2020, under which the Securities & Exchange Commission (SEC), the top US financial regulator, would be allowed to delist Chinese companies from US exchanges if American regulators were not allowed to review the audits of such companies for three consecutive years.
The legislation, which was written by both Republican and Democrat senators, was passed following a series of accounting scandals involving Chinese companies, most famously Luckin Coffee, which was forced to delist from the Nasdaq in April 2020 after admitting it had fabricated more than $300m worth of sales.
The law casts doubt on the ability of Chinese companies to raise as much money by listing on US stock exchanges as they have in the past. A number of big US-listed Chinese names, including Alibaba, Weibo and Baidu, responded by taking a dual listing in Hong Kong.
Forcing such companies to delist would also have huge ramifications for investors. Some 273 Chinese companies are listed in the US and they are worth a total of more than $2trn.
The SEC upped the ante last month by publishing a list of 11 Chinese companies – among them big names like Baidu, BeiGene and Yum China – that it said were in danger of being de-listed under the new law. Shares in all of the companies named fell on the news, with Baidu, the internet…
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Source : skynews
