Bill that could exclude Chinese companies from American stock exchanges. United States To See A “Quick Step” In The Room, Says Analyst

The bill would require foreign companies to let the Public Business Accounting Oversight Board oversee the audit of their financial records if they want to raise funds by selling stocks or bonds to the American public. All American companies and most foreign companies already work with PCAOB in this way, but not Chinese companies.

Henrietta Treyz, director of economic policy at Veda Partners, said investors should “wait for quick approval” of the bill “probably before the end of the month” in a note to clients on Thursday. “From there, he will go to President Trump’s office, where he will sign it, probably in the coming weeks.”

The House Financial Services Committee may have changed the Senate bill, but that did not happen and suggests broad support for the bill, added Treyz.

Sherman cited the example of Luckin Coffee Inc.
United States United States: LK
, which revealed in April that it had produced 2019 sales figures and is under investigation by Chinese securities regulators. Shares listed on the company’s Nasdaq fell $ 50 in mid-January to trade below $ 3 on Thursday. “If this legislation had already been enacted, American investors in Luckin Coffee would have avoided billions of dollars in losses”, congressman said in a press release

.

Read more:Luckin Coffee shares fall 35% after resumption of operations and analyst says investors will be ‘eliminated’

Other analysts believe the bill could move more slowly.

“There are three options for how the House will proceed: quickly pass the bill as written, postpone consideration until later this summer, or pass an amended version which would require approval later of the Senate or a conference committee, “Clayton Allen wrote. Executive Vice President of Trade, Policy and Geopolitical Risk at Height Capital Markets. Allen added that President Donald Trump may prefer delaying the bill in order to reserve it as an influence on Beijing in future negotiations.

White House economic adviser Larry Kudlow told Fox Business Network on Tuesday that “we must” push for more responsibility for Chinese companies listed on the US markets.

“We have to protect investors and protect national security,” said Kudlow. “Many of these companies, by the way, have already had scandals and been costly to investors because they were not transparent in their reports. The Chinese government prohibits this type of transparency.”

The SEC said in 2018 that there were 224 publicly traded companies with $ 1.8 trillion in combined market capitalization “where the PCAOB faces barriers to inspecting the work of key auditors.”

American Economic and Security Review Commission. United States And China compiled a list