Chinese Stocks On Wall Street Still In The Dark: CNN
Investors are breathing a sigh of relief after regulators in Beijing extended an olive branch to the United States, indicating they could change their policies so that Chinese companies could avoid getting kicked off Wall Street, Julia Horowitz reported for CNN Business.
Photo Insert: There is no word yet from US watchdogs if the changes made by the Chinese firms are sufficient, thus leaving their fate on Wall Street hanging in the balance.
Due to the report, shares of tech giant Alibaba in New York rallied almost 7% on Monday. E-commerce platforms Pinduoduo and JD.com leaped 16% and 7%, respectively.
But the celebration may have been a bit premature, as negotiators from the US and China continue to hammer out the details and tensions between the world's two largest economies simmer beneath the surface.
"The policy is still evolving, and there's still a lot of uncertainty," Xiaomeng Lu of the consultancy Eurasia Group told CNN Business.
Over the weekend, the China Securities Regulatory Commission (CSRC), the country's top securities watchdog, proposed changing a decade-old rule that forbids Chinese firms from sharing sensitive data and financial information with overseas regulators. US regulators have long complained that they can't access the books of Chinese companies.
In 2020, the Holding Foreign Companies Accountable Act was signed into law, giving the Securities and Exchange Commission (SEC) power to kick foreign companies off Wall Street if they fail to allow US regulators to review their audits for three straight years. Most Chinese companies listed on Wall Street are said to be controlled by committees of the Chinese Communist Party (CPP) making them adjuncts of the Beijing regime.
Beijing, citing national security concerns, has been resistant to overhauling its policies. It requires companies that are traded overseas to hold their audits in mainland China, where they cannot be examined by foreign agencies.
The new amendment might finally allow US regulators to dig into these contested materials. If that helps resolve the dispute, it could ease a huge source of concern for the more than 200 Chinese firms listed in the US, which have been battered over the last year.
But it's too soon to say for sure. It's not clear if US regulators will see the potential changes as sufficient. Last week, SEC Chair Gary Gensler poured cold water on the idea that a deal was imminent.