Strictly / Chinese companies like Alibaba and Baidu risk getting delisted from US stock markets

         A bill to delist Chinese companies from the US market was passed in a House Senate of                            Congress. According to the provisions of the bill, companies have to certify that they are                                          not under the control of any foreign government

·      Companies controlled by foreign government can be removed from the US stock market

·      Republican Senator John Kennedy said he wanted China to follow the rules

The economic news: A House Senate of the US Congress (Parliament) passed a bill on Wednesday, according to which Chinese companies such as Alibaba Group Holding Limited and Baidu Inc. may be banned in the US stock markets. It is a Bipartisan legislature, which means that it has the support of both major American political parties (Republican and Democrat). The bill was introduced in the Senate by Republican Senator John Kennedy of Louisiana and Democratic Senator Chris Van Houlen of Maryland. The bill was unanimously passed in the Senate. As per the provisions of the Bill, companies have to certify that they are not under the control of any foreign government.










Shares of some of the largest Chinese companies listed in the US fall

According to a Bloomberg report, shares of some of the largest Chinese companies listed in the US declined on Thursday following the passage of the bill. While the market was up during this period. US lawmakers have expressed concern that US companies hold billions of dollars of assets in China. Most of these investments come from pension funds and college endowment funds. The bill provides that if the company is unable to show that it is not under the control of a foreign government or that the US Public Accounting Oversight Board (PCAOB) is unable to audit the company for three consecutive years and cannot determine it. If such a company is not under the control of any foreign government, then the shares of that company will be banned in the US stock markets. Kennedy said he wants China to follow the rules.









US regulator is unable to see the accounts of Chinese companies

Around 95 percent of companies whose balance sheets could not be reviewed use auditors from China. Van Hollen stated that listed companies should follow uniform rules. The bill provides for transparency for all companies to set uniform rules and facilitate investors to take decisions based on information. The hardening of rules can make it difficult for many big private companies to list in the US market, from Jack Ma's company Ant Financial to Soft Bank-backed ByteDance. James Hull, a Beijing analyst and portfolio manager of Hulax, however, said that since the discussion on greater transparency began last year, many Chinese companies have either been listed in Hong Kong or are planning to be listed there. Therefore, Chinese companies are not going to make a big push.









Support of the bill also in the House of Representatives

California House Representative Brad Sharman in the House of Representatives (House of Representatives) said that NASDAQ has taken steps to delist Chinese company Lukin Coffee this week. Company officials had accepted the possibility of manipulating the sales figures by $ 31 million during April-December 2019. Nasdaq then took this step. If this bill had already become law, the investors of Lookin Coffee would not have lost billions of dollars. This bill is an example of growing anger against China in both the political parties of America. This outrage has emerged in the US against China on trade and other issues. This resentment is seen especially among Republican lawmakers. Meanwhile, US President Donald Trump has also blamed China for the coronavirus epidemic.











This bill will be applicable on all US exchanges

Kennedy said in an interview on Tuesday that the bill would apply to US stock markets such as NASDAQ and the New York Stock Exchange. China has not been allowing PCAOB to check the accounts of Chinese companies listed in the US for a long time. PCAOB was founded by Congress in 2002. It was founded after the Enron Corp accounting scam. This organization is designed to prevent fraud in companies, so as to protect the property of shareholders. Since then, there has been tension between China and the US over the issue. Meanwhile, many companies like Alibaba have raised billions of dollars of capital in the US market.









224 foreign companies listed in the US target the bill

The PCAOB is not technically a US government body, but is overseen by the Securities and Exchange Commission (SEC). The SEC is going to hold a meeting on 9 July on the risks of investing in China and other emerging markets. In this, the issue of audit of Chinese companies may arise. According to the SEC, 224 such companies are listed in the US, whose source countries are objecting to PCAOB. The total market capitalization of these companies is 1.8 trillion dollars.