Undertaken under the ‘Holding Foreign Companies Accountable Act,’ the legislation, which has already won bipartisan support in the US House, envisages that companies which list themselves with American stock exchanges like New York Stock Exchange or NASDAQ have to prove that they are not owned or controlled by a foreign government and allow the US Public Accounting Oversight Board to review their financial audits.
As per US authorities, the step has been taken in the backdrop of Chinese authorities blocking overseas regulators from inspecting local accounting firms, citing national security concerns. Remember, Chinese companies have invested in US capital markets for years with an aim to grow their business in dollar-based terms.Headquartered in Shanghai and incorporated in the Cayman Islands, SIMC is a part of China’s Science and Technology Innovation Board.
However, with the US restricting American companies’ deal with SIMC, the Chinese chipmaker’s planned move to invest money in the technological advancement of its product will suffer heavily. As soon after the US administration slapped a ban on the company, its shares across the world started plummeting. Its Hong Kong-listed shares plunged about 24 percent on December 17. Similar development was witnessed on the New York Stock Exchange and NASDAQ.
Now with this move, the US administration seems to have severely damaged Chinese companies’ growing economic profile. And it has come close on the heels of the US freshly blacklisting China’s top chipmaker, Semiconductor Manufacturing International Corporation , drone maker DJI, Beijing-based inspection and security solutions and service provider Nuctech and 60 other Chinese companies.