KATHY DAVEY: The Chinese-US stocks standoff

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The worry is in holding the stock of a Chinese company that is listed only on a US exchange.

In assessing the risk of Chinese companies being forced to delist from US exchanges, it’s best to take a step back and consider why the Securities & Exchange Commission has taken what is seemingly a heavy-handed approach.

China’s stance is that greater access would compromise state security and therefore it has been unwilling to co-operate fully. Now, the nearly 250 Chinese companies listed on US exchanges have until April 2024 to comply or be delisted. This has inevitably weighed on their share prices. And with little prospect of resolution in sight, conversations have shifted from"if these companies are delisted" to"when these companies are delisted".

This share structure was not allowed on the HKEx at the time and Hong Kong missed out on what was then the largest IPO in the world. . It’s likely these companies are scrambling to find a plan B, and the HKEx has made this a lot easier with further reforms implemented as of January 1 2022. This links mainland-China stock exchanges to the HKEx, allowing mainland-China investors to buy shares in Hong Kong.

 

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