US Senate passes bill that puts some Chinese listings at risk

Senate passes bill to delist Chinese companies from exchanges

Senate passes bill removing rogue Chinese firms from US stock exchanges

On Wednesday, the Senate easily passed a bill that would forbid the likes of Alibaba, JD.com (NASDAQ: JD) and scores of other Chinese companies from listing in the US - a political push that could put the spotlight on leveraged exchange-traded funds such as the Direxion Daily FTSE China Bull 3X Shares (NYSE: YINN) and the Direxion Daily FTSE China Bear 3X Shares (NYSE: YANG).

"The Holding Foreign Companies Accountable Act" will prohibit any firm's securities to be listed on any exchange in the nation should it fail to comply with USA accounting standards three years in a row.

The bill, introduced by Senator John Kennedy, a Republican from Louisiana, and Chris Van Hollen, a Democrat from Maryland, would require companies to certify that they are not under the control of a foreign government.

The US government and Congress have shown growing concerns that Chinese firms expanding business in the US are supported or controlled by China's government.

"Many Americans invest in United States stock exchange as part of their retirement savings, and dishonest companies operating on the exchanges put Americans at risk".

Nevertheless, the bill still has to pass the House of Representatives.

"I was proud to work with Senator Kennedy on this important legislation that would protect American retail investors and pensioners from risky investments in fraudulent, opaque Chinese companies that are listed on US exchanges and trade on over-the-counter markets", Rubio said in a statement.

The passing of the bill is a reflection of the growing anger among USA lawmakers towards China and its handling of the coronavirus pandemic.

"The administration is not contemplating blocking Chinese companies from listing shares on USA stock exchanges at this time".

According to a list compiled by the U.S.

Nasdaq recently pressured Luckin Coffee (LK), a Chinese coffee chain engulfed in widespread accounting fraud, to delist. However, he also said that action on these firms may backfire as these may move to the exchanges in London or Hong Kong.

Mr Trump and officials in his administration argue that China mishandled the coronavirus outbreak in its early stages.

The Chinese regime now blocks overseas regulators, including the Securities Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB), from inspecting full audit reports of publicly traded companies headquartered in mainland China and Hong Kong, citing national security and state secrecy. "All these can be considered the preparations for the return of Chinese companies to the A-share market", he said.

National Economic Council Director Larry Kudlow argues the US has to hold Chinese companies listed on the NYSE and Nasdaq accountable for investor protection and national security reasons. Rubio applauded the passage of the Kennedy-Van Hollen bill and said it incorporated aspects of a similar bill he introduced past year. -China Economic and Security Review Commission annual report.

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