China Delistings?
Source: YouTube · Patrick Boyle · published Aug 31, 2022 · 15:51
The US and China reached a tentative agreement allowing US inspectors access to audits of Chinese companies, potentially preventing the delisting of roughly 200 stocks 0:00-0:12.
Key Takeaways:
• The deal permits inspections of financial papers transferred to Hong Kong, aiming to resolve a decade-long dispute over access that previously collapsed in 2013 0:27-0:45 1:25-1:34.
• Mandated by the 2020 Holding Foreign Companies Accountable Act, these inspections address governance concerns following fraud scandals like Luckin Coffee 2:55-3:13 5:11-5:26.
• Investors face significant legal risks due to Variable Interest Entity (VIE) structures used to bypass Chinese investment bans, highlighted by events like the Alipay spin-off 8:52-9:02 9:46-9:58.
• Skepticism remains high, with Goldman Sachs estimating a 50% chance of eventual delisting if China fails to fully comply with data sharing requirements 13:34-13:51.
The agreement's success is uncertain, as SEC Chair Gary Gensler emphasized that compliance depends on actual audit access 14:57-15:10.
Sources:
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First 800 characters of the transcript
Last week it was announced that The US and
China had reached an agreement allowing the US Public Company Accounting Oversight Board
– known as the PCAOB - access to audits of Chinese companies that are listed on US
exchanges. This deal would halt the threatened delisting
of around 200 Chinese stocks that are listed on US exchanges. Now, this agreement is not really that new. China had agreed back in 2013 after years
of negotiations to allow the PCAOB to inspect the audit work of Chinese companies whose
securities traded in the United States. But this agreement then collapsed when US
auditors actually travelled to China to check the accounts of a large tech company and were
stonewalled by regulators. So now, almost 10 years later, US officials,
along with Chinese companies and people who ow…