All
 
|
 
 


Chinese companies on the US stock exchanges in the context of aggravation of Sino-American relations: the relationship of the national markets, delisting risks and possible scenarios
 
PIIS013128120018444-9-1
DOI10.31857/S013128120018444-9
Publication type Article
Status Published
Authors
Ivan Vakhrushin 
Occupation: Senior Research Scholar, Center for Asia Pacific Studies
Affiliation: Primakov National Research Institute of World Economy and International Relations of the Russian Academy of Sciences (IMEMO)
Address: 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation
Journal nameProblemy Dalnego Vostoka
EditionIssue 1
Pages96-110
Abstract

The article analyzes the relationship between national stock markets of China and the United States which results in conclusion about prevalence of indirect psychological connection between them. It also considers the issues related to future prospects of Chinese companies on the US stock exchanges and the risk of their delisting in the context of sharp aggravation of Sino-American relations and active actions of the US Securities and Exchange Commission (SEC), aimed at tightening the requirements for auditing, financial reporting and data disclosure by the US-listed foreign companies. The process of forming a new regulatory framework for delisting Chinese companies with adoption of the core Holding Financial Companies Accountable Act (HFCAA) is disclosed. The IPO scheme by Chinese companies through variable interest entities (VIE) is reflected, and related risks are identified. The competitive potential of national stock exchanges in terms of attracting Chinese IPOs is analyzed with conclusion about significantly stricter requirements and lengthy procedures on Chinese exchanges in comparison with American ones. It is assumed that presently the mass delisting of Chinese companies from American exchanges seems an unlikely scenario. At the same time, the full range of delisting scenarios is considered from the most preferred option for investors (conversion of American securities into shares on Chinese exchanges) to the worst (freezing of shares for an indefinite period).

The article was prepared within the project “Post-crisis world order: challenges and technologies, competition and cooperation” supported by the grant from Ministry of Science and Higher Education of the Russian Federation program for research projects in priority areas of scientific and technological development (Agreement № 075-15-2020-783).

KeywordsSino-American relations, Chinese foreign-listed companies, the US stock exchanges, foreign public companies data disclosure, Chinese companies delisting risks, US Securities and Exchange Commission (SEC), securities market regulatory framework, variable interest entities (VIE)
Received18.11.2021
Publication date16.02.2022
Number of characters37329
Cite  
100 rub.
When subscribing to an article or issue, the user can download PDF, evaluate the publication or contact the author. Need to register.

Number of purchasers: 2, views: 503

Readers community rating: votes 0 

1. Abramov A.Е., Kosyrev A.G., Radygin A.D., CHernova M.I. Opyt i uroki publichnyh razmeshchenij akcij na fondovyh rynkah SSHA, Kitaya i Rossii (Experiences and Lessons of Public Offerings on the Stock Markets of the USA, China and Russia). Ekonomicheskoe razvitie Rossii. 2021. T. 28. № 5. (In Russ.).
2. Barrett E. What happens to an investor’s shares when a company delists? Fortune. 21.05.2020. URL:https://fortune.com/2020/05/21/delist-chinese-company-shares-what-happens/  (accessed: 22.12.2021).
3. Chen L.Y., Surane J. China’s Overseas IPOs. Bloomberg. 28.12.2021. URL:https://www.bloomberg.com/quicktake/chinas-fraught-ipos?sref=cus85deZ  (accessed: 29.12.2021).
4. Dadashova K., Pozychanyuk V. Krokodil v reke YAnczy: kak Dzhek Ma postroil samyj dorogoj fintekh v mire i pochemu sorvalos' ego IPO (Crocodile in the Yangtze River: how Jack Ma built the most expensive fintech in the world and why his IPO failed). The Bell. 09.11.2020. URL:https://thebell.io/krokodil-v-reke-yantszy-kak-dzhek-ma-postroil-samyj-dorogoj-finteh-v-mire-i-pochemu-sorvalos-ego-ipo  (accessed: 28.12.2021). (In Russ.).
5. Fioretti J., Mookerjee I. There’s a Long Way to Go Before China Abandons U.S. Listings. Bloomberg. 21.05.2020. URL:https://www.bloomberg.com/news/articles/2020–05–21/there-s-long-way-to-go-before-china-inc-abandons-u-s-listings?srnd=technology-vp&sref=l3J6d079  (accessed: 07.12.2021).
6. Flatley D., Bain B. Senate overwhelmingly approves bill to delist certain Chinese companies. Here's who it could affect. Fortune. 20.05.2020. URL:https://fortune.com/2020/05/20/senate-delist-chinese-companies-china-business-government/  (accessed: 17.12.2021).
7. Franzeres J. Why ‘Delisting’ Is a Worry in China-U.S. Market Mess: QuickTake. Bloomberg. 27.07.2021. URL: https://www.bloomberg.com/news/articles/2021–07–27/why-delisting-is-a-worry-in-china-u-s-market-mess-quicktake?sref=cus85deZ  (accessed: 08.12.2021).
8. Gamza L.A. Tekhnologicheskoe protivostoyanie SSHA i Kitaya v ATR (Technological Confrontation between the US and China in the Asia-Pacific Region). Rossiya i ATR. 2020. № 3(109). DOI 10.24411/1026–8804–2020–10038. (In Russ.).
9. Hopkins J., Lang M., Zhao D. When Enron Met Alibaba: The Rise of VIEs in China. Harvard Business School. May 2017. URL:https://www.hbs.edu/faculty/Shared%20Documents/conferences/2017-imo/Mark_Lang_HLZ.pdf  (accessed: 12.12.2021).
10. Klebnikov S. Chinese Companies Must Play By American Rules Or Be Banned From U.S. Exchanges, Senate Rules. Forbes. 20.05.2020. URL:https://www.forbes.com/sites/sergeiklebnikov/2020/05/20/chinese-companies-must-play-by-american-rules-or-be-banned-from-us-exchanges-senate-rules/#55de84b855cb  (accessed: 05.12.2021).
11. Klein J.X. US takes new step on delisting Chinese companies from stock exchanges for audit violations. South China Morning Post. 23.09.2021. URL:https://www.scmp.com/news/china/article/3149727/us-takes-new-step-delisting-chinese-companies-stock-exchanges-audit  (accessed: 25.12.2021).
12. Kompan I. Zachem Kitaj ubivaet svoi luchshie kompanii i chto zhdet investorov (Why is China killing its best companies and what awaits investors). Finansovyj portal «Minfin». 23.07.2021. URL:https://minfin.com.ua/invest/articles/nad-kitayskimi-kompaniyami-sguschayutsya-tuchi-kak-eto-mozhet-pomoch-investoram/  (accessed: 23.12.2021). (In Russ.).
13. Leksyutina YA.V. Amerikano-kitajskie otnosheniya v 2018–2019 gg.: torgovaya vojna i process dekaplinga (US-China Relations in 2018–2019: Trade War and the Process of Decoupling). Mirovaya ekonomika i mezhdunarodnye otnosheniya. 2020. T. 64. № 6. DOI 10.20542/0131–2227–2020–64–6–85–93. (In Russ.).
14. Millman G.J. Alibaba's IPO Puts VIE Structure in the Spotlight. Wall Street Journal. 22.09.2014. URL:https://www.wsj.com/articles/BL-252B-5198  (accessed: 27.12.2021).
15. Perova M. K. Kompanii Kitaya v vysokotekhnologichnyh otraslyah ekonomiki SSHA (Chinese Companies in US High-Tech Sectors). Prostranstvennaya ekonomika. 2020. T. 16. № 3. DOI 10.14530/se.2020.3.139–155. (In Russ.).
16. Perova M. K. Pryamye investicii Kitaya v SSHA: sovremennye tendencii i voprosy regulirovaniya (China's Direct Investment in the United States: current trends and regulatory issues). Zakonodatel'stvo i ekonomika. 2017. № 2. (In Russ.).
17. Ping C.K., Osipovich A. NYSE to Delist Chinese Telecom Carriers After Rejecting Appeals. Wall Street Journal. 07.05.2021. URL:https://www.wsj.com/articles/nyse-to-delist-chinese-telecoms-carriers-after-rejecting-appeals-11620394719  (accessed: 19.12.2021).
18. Polyanskij D. Na rossijskih birzhah poyavyatsya akcii kompanij iz KNR i Gonkonga (Shares of companies from China and Hong Kong will appear on Russian stock exchanges). RBK Investicii. 04.06.2021. URL:https://quote.rbc.ru/news/article/60b9116c9a794740d9e17b22  (accessed: 18.12.2021). (In Russ.).
19. Supyan V. B. Amerikano-kitajskie torgovo-ekonomicheskie otnosheniya: prichiny krizisa i ego perspektivy (US-China Trade Relations: Causes of Crisis and Prospects). Rossijskij vneshneekonomicheskij vestnik. 2019. № 9. (In Russ.).
20. Wang E. Nasdaq to tighten listing rules, restricting Chinese IPOs. Reuters. 19.05.2020. URL:https://www.reuters.com/article/us-nasdaq-china-listings-exclusive/exclusive-nasdaq-to-tighten-listing-rules-restricting-chinese-ipos-sources-idUSKB№  22V01Q (accessed: 10.12.2021).
21. Wei Shang-Jin. America’s Delisting Threat Could Pay Off. Project Syndicate. 25.05.2020. URL:https://www.project-syndicate.org/commentary/benefit-of-threatening-to-delist-chinese-companies-by-shang-jin-wei-2020–05?barrier=accesspaylog  (accessed: 23.12.2021).
22. Wei Shang-Jin. What if America Delists Chinese Firms? Project Syndicate. 21.07.2021. URL:https://www.project-syndicate.org/commentary/america-threat-to-delist-chinese-firms-by-shang-jin-wei-2021–07?barrier=accesspaylog  (accessed: 05.12.2021).

Система Orphus

Loading...
Up