• The Trump administration “is considering delisting Chinese companies from U.S. stock exchanges, three sources briefed on the matter said on Friday.” The move “would be a radical escalation of U.S.-China trade tensions.”
  • It could also be seen as “part of a broader effort to limit U.S. investment in Chinese companies, two of the sources said.”
  • One source said the move was “motivated by the Trump administration’s growing security concerns about the companies’ activities.” Any decision would have to be approved by President Trump.
  • One of the sources said: “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 U.S. investors.”
  • On news of the possible move, major U.S. indexes fell. Coincidentally, the news “came days before China celebrates the 70th anniversary of the birth of the People’s Republic on Oct. 1, when the world’s No. 2 economy will shut down for a week of festivities.”
  • Details of how the delisting would work have not been released at this time.
  • In June, however, “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 been resistant to allow “overseas regulators to inspect local accounting firms – including member firms of the Big Four international accounting networks – citing national security concerns.”
  • At the time, Republican Senator Marco Rubio said: “Beijing should no longer be allowed to shield U.S.-listed Chinese companies from complying with American laws and regulations for financial transparency and accountability.”
  • Trade talks are expected to resume between the U.S. and China “Oct. 10-11 after months of tit-for-tat moves by both sides which have weakened global growth and driven rollercoaster moves in markets.”

Reference Links

  • Reuters: Trump considers delisting Chinese firms from U.S. markets: sources READ
  • Politico: Trump administration considers hitting China’s Wall Street connections READ
  • Investor’s Business Daily: China Stocks Sink As White House Mulls Limits On U.S. Portfolio Flows To China READ
  • South China Morning Post: White House weighs restrictions on US capital flows into China READ

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