US and Chinese regulators seem increasingly at odds when they are really trying to achieve the same thing. A far-off deadline may save the day.
It almost looks as if two ships are passing each other in the night. The US Securities and Exchange Commission (SEC) on Wednesday identified another 88 listed companies that do not meet its external auditing criteria under a 2020 congressional act.
The list includes many well-known Chinese names, among them Tencent Music, the Agora streaming service, the BlueCity LGBTQ online platform, which was listed on Nasdaq in 2020 (image above), China Eastern, and China Southern, two airlines, as well as online retailer JD.com. This is on top of the 17 companies identified in April, among them Luckin Coffee - whose faked revenues and subsequent bankruptcy triggered much of the subsequent regulatory frenzy in both countries.
Wide-ranging Proposal
The step also comes shortly after the China Securities Regulatory Commission (CSRC) announcement in April of a wide-ranging proposal allowing foreign authorities and auditors the ability to review, audit, and inspect Chinese companies listed abroad.
On the surface, this all looks like an accident waiting to happen.
But the US has given the companies a full three years to comply with the new requirements while Qi Wang, co-founder and chief investment officer of MegaTrust Investments (HK), believes the mainland regulation should be in place in six to eight months, as he indicated in an interview with finews.asia.
That should be more than enough time for investors to decide whether it is a good idea to keep their shares or not.
