Home US-China investment flows belie geopolitical tensions
US-China investment flows belie geopolitical tensions
Data show efforts by Trump administration to decouple economies has fallen short
World Economy News
4 Feb 2021 • 3 min read
Kuaishou, a popular Chinese short video platform, seems a world away from geopolitics. It shows items such as a grandmother singing Hey Jude with her Chihuahua, migrant workers dancing at construction sites and farmers making pork dumplings.
But the company’s initial public offering in Hong Kong this week which is set to be the world’s largest since the start of the coronavirus pandemic reveals a basic truth about the US’s strategic rivalry with China: when it comes to making money, there is much more that attracts than repels.
Author Bio
Daniel W. Vena, CPA, CGMA is a long-term investor searching for intangibles that provide explosive growth opportunities in his investments. He served on active duty with the US Army and has a Bachelor s degree in accounting.
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In the waning days of 2020, President Trump signed the Holding Foreign Companies Accountable Act into law. The measure prohibits the stocks of foreign companies from trading on U.S. exchanges if they refuse to submit their audits to U.S. regulators for review. This would lead to the very real possibility that Chinese stocks could be delisted from U.S. exchanges.
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President Trump Issues Executive Order Prohibiting Transactions Involving “Communist Chinese Military Companies,” Signs Holding Foreign Companies Accountable Act Tuesday, February 2, 2021
This article summarizes two recent developments relevant to China-based issuers whose securities are publicly traded in the United States. These developments may have a significant impact on U.S. persons that invest in those securities, including U.S. investment funds and their managers.
Executive Order 13959 and Subsequent Developments
On November 12, 2020, then-President Donald J. Trump issued Executive Order 13959,
Addressing the Threat from Securities Investments That Finance Communist Chinese Military Companies. Under existing statutory authority, the U.S. Department of Defense (DOD), acting in coordination with the U.S. Department of the Treasury, identifies and publishes a list of “Communist Chinese military companies” (CCMCs) that operate directly or
REGULATORY UPDATES
SEC Proposes Conditional Exemption for Finders Assisting Small Businesses with Capital Raising
On October 7, 2020, the Securities Exchange Commission (the “SEC”) proposed a conditional exemption from broker registration requirements for certain “finders” who assist issuers with raising capital in private markets. If adopted, the proposed exemption would permit natural persons to engage in certain limited activities involving accredited investors without registering with the SEC as brokers. The proposed exemption seeks to assist small businesses in raising capital and to provide regulatory clarity to investors, issuers, and the finders who assist them. The proposed exemption would establish guidelines for both registered broker activity and limited activity by finders that would be exempt from registration.
Chinese companies will struggle to list on US stock markets, says GlobalData
The ongoing geopolitical stand-off between the US and China will discourage Chinese companies from listing on the US stock exchanges while those with existing listings in the US will look eastwards, says GlobalData, a leading data and analytics company.
GlobalData’s latest report, ‘Thematic Research – TMT IPO themes’, reveals that 25 Chinese tech, media, and telecom (TMT) companies completed IPOs on the US stock exchanges in 2020. However, geopolitical developments mean there are increasing concerns about the future of some large Chinese company listings in the US. These challenges will force Chinese TMT companies to stay away from US exchanges in 2021.