The flags of China and the United States are seen printed on paper in this January 27, 2022 illustration. REUTERS/Dado Ruvic/Illustration
SHANGHAI, March 27 – Chinese regulators and their U.S. counterparts are working hard to resolve an audit dispute affecting U.S.-listed Chinese companies and aim to achieve effective and sustainable cooperation as soon as possible, a state-run official reported newspaper on Sunday.
Citing a source close to Chinese regulators, the official China Securities Journal reported that the China Securities Regulatory Commission (CSRC) heard the opinions of some US-listed Chinese companies during an online meeting on Sunday.
“Both Chinese and US regulators are fully aware of each other’s concerns and are reaching out to each other and working hard to find solutions to the problem in order to achieve effective and sustainable cooperation as soon as possible,” the statement said the source quoted.
“This is in the best interests of both countries’ capital markets and global investors.”
CSRC said recent discussions with US regulators have been efficient, open and professional, the newspaper said.
The comments come days after the US public company’s accounting regulator said recent media speculation about an impending deal with China was “premature” and it remained unclear whether the Chinese government would grant the access required by a new US listing law. Continue reading
Washington demands full access to the books of US-listed Chinese companies, but Beijing bans foreign inspection of working papers of local accounting firms – a long-simmering accounting dispute that puts hundreds of billions of dollars in US investments at stake. Continue reading
The Hang Seng Tech Index (.HSTECH), which tracks some of China’s biggest tech companies including Alibaba Group Holding Ltd (9988.HK) and Baidu Inc (9888.HK), rose 3.6% on Monday morning, compared with up 1.3% in the Hang Seng benchmark index.
SIGNIFICANT DIFFERENCES
However, some analysts and investors remain skeptical that a solution will be found.
“There are significant differences between US and Chinese regulators,” wrote Hao Hong, research director at BOCOM International, on Monday. “Many Chinese companies listed in the US will eventually be delisted.”
US regulators require disclosure of government interests in listed companies, as well as sensitive information and data, while the Chinese government “has tightened its scrutiny over many of China’s largest and most important companies,” he added.
To avert delisting risk, New York-based asset manager Krane Funds Advisors announced earlier this month that its $4.9 billion KraneShare CSI China Internet ETF aims to track all Chinese American Depository Receipts (ADRs) to convert to Hong Kong stocks in its portfolio in the coming months.
Chinese regulators have asked some of the country’s US-listed companies, including Alibaba, Baidu and JD.com, to prepare for more audit disclosures as Beijing ramps up efforts to ensure they remain listed in New York, reported Reuters last week. Continue reading
The Financial Times and Bloomberg News also reported this month that China’s securities regulators are considering a proposal that would allow US regulators to review auditors’ working papers for some companies later this year.
CSRC warned market participants not to blindly believe speculation by some media outlets with little knowledge of the details and direction of the talks, as such reports would unnecessarily disrupt market expectations, the China Securities Journal reported on Sunday.
Reporting from Shanghai Newsroom Editors by Raissa Kasolowsky & Simon Cameron-Moore