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Investment in China and the prospects for the world’s second-largest economy are top concerns for the World Economic Forum.
Spencer Platt/Getty Images
DAVOS, SWITZERLAND A top New York Stock Exchange executive expects the number of Chinese companies listed in the U.S. to stay the same or grow, even as this group of stocks remains under pressure from the threat of radiation.
Investment in China and the prospects for the world’s second-largest economy are at the center of the concerns of the World Economic Forum. Since this group of business and political elites last met in January 2020, before the pandemic, Chinese tech stocks listed in the United States have lost more than 20% of their value, said John Tuttle, vice – chairman of the NYSE and commercial director of the stock exchanges. . the
S&P500
increased by as much, even after a recent correction.
There’s been this big divergence in the markets, Tuttle said.
The crown jewels of Chinese companies
Ali Baba
(symbol: BABA),
Baidu
,
(TO START UP),
Tencent
(0700.HK) and others have seen their stock prices wiped out amid regulatory pressures on both sides of the Pacific. Alibaba shares alone have fallen nearly 60% in the past 12 months.
A crackdown by Beijing has done most of the damage, as President Xi Jinping has sought to consolidate his control over China’s economy and regulators have curbed the country’s fast-growing tech sector, which accounts for about 40% of product raw interior.
But the United States has become a more recent source of concern. The Securities and Exchange Commission (SEC) has constantly added to a growing list of companies, including
JD.com
and
NetEase
(NTES) which may be forced to delist in New York if they fail to comply with US accounting standards.
This is the latest part of the enforcement of the Foreign Company Liability Act, which came into force at the end of 2020 and requires some foreign companies to be more transparent in making accounting records available. Chinese companies are among the top targets, and delisting is the ultimate cost of non-compliance.
While China has repeatedly signaled it will clarify the environment for downed tech companies and indicated it will cooperate with U.S. regulators in relaxing rules regarding foreign auditors, the picture remains unclear.
What impacts the market and international investor sentiment is the communication of these strategies, Tuttle said.
Despite this, the NYSE executive said he was encouraged that the number of Chinese companies listed in the United States will remain where they are, if not increase.
In an interview, Tuttle saidBarronsthat he believes that three things need to be clarified for investors; he sees that all three are resolved in the short to medium term. The first is the role China’s regulators, like its cybersecurity watchdogs, will play in vetting Chinese companies seeking access to international capital.
Second, the SEC has clear information about variable interest entities’ disclosure of obfuscated corporate structures that companies like to
Ali Baba
are publicly traded in the United States and sees it being developed in the coming months.
Third, the dialogue between Chinese regulators, the SEC and the Public Company Accounting Oversight Board on Chinese auditor inspection cooperation.
Hopefully there will be a diplomatic resolution in the short term, Tuttle said. And in this way, investors will be able to strike the right balance between market access and investor protection.
Tuttle declined to say whether the NYSE was consulted on the matter. Were actively engaged with policymakers and regulators on all aspects of public procurement, he adds.
Write to Jack Denton at [email protected]
