Investments could flow back into China as companies avoid U.S. delisting

Chinese e-commerce giant Alibaba is one of more than 100 companies that have faced the risk of being delisted in the United States in 2024 if audit information is not provided to PCAOB inspectors.

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Investors may regain confidence to invest in Chinese tech stocks as the companies avoid delisting from U.S. stock exchanges and Beijing promises policy support, according to one investment manager. there is.

Last week, the Public Company Accounting Oversight Board, the US accounting oversight body, said it had gained full access to inspect and investigate Chinese companies for the first time since China finally granted access to the US in August. said.

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Over 100 Chinese technology companies such as Alibaba, Baidu When It faced the risk of being delisted in the United States in 2024 if audit information was not provided to PCAOB inspectors.

Investors often grapple with the lack of transparency in Chinese stocks.

“It will allow institutional investors to come back. Professional investors were so terrified of this delisting risk that they sat on the sidelines,” said the US-based investor. Brendan Ahern, chief investment officer of manager KraneShares, told CNBC’s “Squawk Box Asia.” ” on Wednesday.

China's tech: more policies to boost domestic consumption expected, says KraneShares

According to the U.S.-China Economic and Security Review Commission, as of September 30, there were 262 Chinese companies listed on U.S. exchanges with a market capitalization of $775 billion.

“Once that risk is cleared based on the PCAOB announcement, we will see investment dollars return to these names,” Ahern said.

“These internet giants are where investors really want to invest when it comes to China,” Ahern said.

However, he also warned that “it’s still early days, weeks and months to see that capital back in space.”

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But he also said policy support would help boost the growth of these companies. Last week, China pledged to boost domestic consumption next year. This is because the country is on track to boost growth after ending its zero Covid policy.

“2023 will be the year we receive a lot of policy support from the government, including boosting domestic consumption,” Ahern said. “About 25% of all retail sales come from businesses.”

“The Chinese government really needs these internet companies, which explains why some of the regulatory scrutiny they experienced in 2021 has receded,” Ahern said.

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