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 October 1, 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 per cent. JD.com fell 5.95 per cent and Baidu Inc declined 3.67 per cent. The iShares China Large-Cap ETF shed 1.15 per cent.
Shares of New York Stock Exchange-owner Intercontinental Exchange Inc ended down 1.88 per cent and shares of Nasdaq Inc declined 1.70 per cent.
It was not immediately clear how any delisting would work.
In June, US 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 PCAOB (Public Company Accounting Oversight Board) process poses risks to US investors,” the source said. — Reuters
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