Investors swap China holdings from Wall Street to Hong Kong as delisting threat brews – By Reuters Staff (Reuters) / Dec 11 2020
SHANGHAI (Reuters) – Global fund managers are reducing their holdings in U.S-listed Chinese companies such as Alibaba, Netease and JD.com as risks grow they will be forced off American exchanges, switching instead into shares of the companies listed in Hong Kong.
FILE PHOTO: Signage for Alibaba Group Holding Ltd. covers the front facade of the New York Stock Exchange November 11, 2015. REUTERS/Brendan McDermid
Delisting risks surfaced last September, when U.S. President Donald Trump’s administration explored moves to kick Chinese companies off Wall Street unless they abide by U.S. accounting standards, part of an escalating standoff between the world’s top two economies.
The threat is now real. The Holding Foreign Companies Accountable Act has been passed by both Chambers of the U.S. Congress and should soon be signed into law by Trump. Once law, foreign issuers in the United States which decline a review of their audits for three years can be delisted.
Since most Chinese companies are prohibited by mainland laws from disclosing information that might be considered state secrets, they are often unable to comply with such audit reviews, making them vulnerable to delisting.
