Listed Chinese companies in the US are seeing a return against the backdrop of US’ escalating threats on Chinese firms under the guise of fraudulent accounting practices.
Chinese officials urged the US to make sincere efforts to solve related problems based on international conventions of cross-border audit supervision, instead of politicizing related rules.
China holds a zero tolerance attitude towards financial fraudulent activities of listed companies, Geng Shuang, the Chinese Foreign Ministry spokesperson, told a press conference on Friday.
Geng said that “Chinese and American supervisory authorities have various means of cooperation in auditing oversight of cross-border listings, but what we are seeing now is relevant US supervisory body’s reluctance to fix the problem.”
In response to US Secretary of State Mike Pompeo’s so-called warning to American investors against fraudulent accounting practices of Chinese firms and praise of further restrictions, Geng said that the recent US politician’s claim is biased, and is a political scheme aimed at forcing Chinese firms out, which will eventually damage US investors’ interests drastically.
“Jointly conducting regulations by both sides on public companies is a common international practice for advanced financial markets involving cross-border listings,” Dong Shaopeng, an adviser for the China Securities Regulatory Commission, told the Global Times on Friday.
Any unilateral decision to alter previous cooperation agreements is unreasonable, Dong noted.
US politicians’ constant politicization of audit regulation rules has led to uncertainties and risks for foreign firms in the US.
Executive Director at Hong Kong Exchanges and Clearing Charles Li Xiaojia on Thursday said many US-listed Chinese firms will likely list on the Hong Kong exchange this year, Reuters reported.
Many Chinese firms chose to go public in the US because they were unable to list in Hong Kong. With new IPO rules in place, some firms are now qualified to come back, Li said, noting that listing in Hong Kong would help bring these companies closer to their main customers.
The atmosphere in the US has become less friendly, while Hong Kong has made many fundamental changes in listing rules, and has become more flexible, Li said.
Chinese e-commerce platform JD.com has filed a secondary listing in Hong Kong. The company plans to issue 133 million new shares next week, with an upper price limit of HK$236 ($30.5) per share, media reports said.
According to its financial report, JD.com reported net revenue of 146.2 billion yuan ($20.6 billion) in the first quarter amid the coronavirus pandemic, a 20.7 percent increase year-on-year.
Net Ease, a Chinese internet giant, is also preparing its IPO in Hong Kong, with its shares set to be listed on Thursday at an upper price limit of HK$126, according to a statement of the company.
As one of first generation of internet companies in China, Net Ease was founded in 1997, with business now ranging from e-commerce, online education, video games and others. It has developed into the second largest mobile game company in the world, media reports said.
Li Daxiao, the chief economist at Shenzhen-based Yingda Securities, said that individual cases of financial fraud happen in every stock market. On the contrary, many Chinese public firms listing in the US have shown high quality, with favorable growth rates, such as Alibaba and Net Ease.
These firms’ return could further enhance Hong Kong’s role as a global financial hub, while the US stock market, under certain politicians’ ill-intended schemes, will suspend its globalization trend, which would be a huge loss to the US in the long run.
It is hoped that the US will demonstrate its sincerity in solving the problem and following international common practice in cross-border listing oversight, resolve differences through equal cooperation so as to earnestly protect investors’ interests, according to Geng.
E-commerce platform JD.com’s unmanned aerial vehicle for delivery being displayed at the Consumer Electronics Show in 2019. Photo: VCG
