US-Listed Chinese Firms Destined To Leave
Communist China's companies listed on Wall Street will likely to be cut off from U.S. capital markets in the next two or three years.
The US Treasury will put Communist China's drone maker DJI and the other groups on its “Chinese military-industrial complex companies” blacklist on Thursday, according to two people briefed on the move. US investors are barred from taking financial stakes in the 60 Chinese groups already on the blacklist.
The other Chinese companies that will be blacklisted on Thursday include Megvii, SenseTime’s main rival that last year halted plans to list in Hong Kong after it was put on a separate US blacklist, and Dawning Information Industry, a supercomputer manufacturer that operates cloud computing services in Xinjiang. Also to be added are CloudWalk Technology, a facial recognition software company, Xiamen Meiya Pico, a cyber security group that works with law enforcement, Yitu Technology, an artificial intelligence company, Leon Technology, a cloud computing company, and NetPosa Technologies, a producer of cloud-based surveillance systems.
DJI and Megvii are not publicly traded, but Dawning Information, which is also known as Sugon, is listed in Shanghai, and Leon, NetPosa and Meiya Pico trade in Shenzhen.
In Three Years Chinese Firms Will Lose Access To The Western Capital
For a lot of Chinese companies listed in U.S. markets, it’s essentially game over, Mr. David Loevinger, managing director for emerging markets sovereign research at TCW Group, told media. It is an issue that’s been hanging out there for 20 years — we haven’t been able to solve it, he added.
TCW Group had $265.8 billion in assets under management as of Sept. 30, 2021, according to the company’s website.
The U.S. Securities and Exchange Commission this month finalized rules to implement a law that would allow the market regulator to ban foreign companies listed in the U.S. from trading if their auditors do not comply with requests for information from American regulators.
The law was passed in 2020 after Chinese regulators repeatedly denied requests from the Public Company Accounting Oversight Board to inspect the audits of Chinese firms that list and trade in the United States.
Given the current level of distrust between the U.S. and Chinese governments, and with the bilateral relationship unlikely to improve anytime soon, there is no way we are going to solve this in the next few years, Mr. Loevinger said.