Pompeo: "Regulation Needed for All Globally Listed Chinese Companies"

"Nasdaq Regulating Chinese Companies Should Be a Model for Global Exchanges"
South Korean Stock Market Also Suspends Trading of Chinese Firms
Google Warns of Chinese Hacking Attempts on US Presidential Campaigns

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Mike Pompeo, U.S. Secretary of State, who has been taking a confrontational stance against China day after day, expressed the need for strong regulations not only on domestic but also on Chinese companies listed on stock exchanges worldwide. It appears that the all-out conflict with China is spreading globally. The U.S. also raised an analysis that China is attempting to interfere in the U.S. presidential election through hacking.

On the 4th (local time), Secretary Pompeo stated in a press release regarding Nasdaq's recent measures to restrict initial public offerings (IPOs) of Chinese companies, "American investors should not be exposed to hidden unfair risks. Nasdaq's measures should serve as a model for other exchanges in the U.S. and worldwide." He added, "The Trump administration has worked to ensure that American companies and investors compete on the same standards as other countries," and "I applaud Nasdaq for requiring all listed companies to undergo audits in accordance with international accounting standards."

Nasdaq previously introduced investigative authority over the accounting audits of Chinese companies seeking to go public following the accounting fraud scandal of Luckin Coffee, known as the Chinese version of Starbucks, and included requirements in its listing rules that companies must comply with international accounting standards. It also stipulated that companies from certain countries, including China, must specify a minimum fundraising amount when pursuing an IPO. According to the new regulations, companies must secure at least $25 million or 25% of their market capitalization through public offerings.

Secretary Pompeo emphasized that Nasdaq's measures are a natural response considering the accounting fraud practices of Chinese companies.

Currently, there are about 240 Chinese companies listed on the New York Stock Exchange and Nasdaq. Representative Chinese companies such as Baidu, the search engine, Ctrip, a travel agency, and NetEase, a gaming company, are traded on the U.S. stock market.

MarketWatch reported that Secretary Pompeo's remarks came amid legislative efforts in the U.S. Congress to block Chinese companies from listing.

There is also an interpretation that Pompeo's comments targeted the Hong Kong stock market. The Hong Kong Exchange is promoting a plan to simultaneously list companies already listed on the New York Stock Exchange and Nasdaq on the Hong Kong stock market. The U.S. has warned of the loss of Hong Kong's financial hub function in response to China's handling of the Hong Kong National Security Law, and Pompeo's remarks suggest a preemptive measure assuming a large number of listings on the Hong Kong stock market. Chinese companies are also listed on the Korean stock market, mainly on KOSDAQ.

In addition, the U.S. expressed concerns that China might interfere in the upcoming U.S. presidential election in November. On the same day, Google announced that Chinese hackers are attempting to hack the emails of personnel from the campaign of former Vice President Joe Biden, who is virtually confirmed as the Democratic presidential candidate. Shane Huntley, Google's Director of Threat Analysis, explained, "There is no evidence yet that Chinese hackers have succeeded in hacking the Biden campaign," but vigilance is spreading within the U.S. Biden's camp also acknowledged Google's warning about hacking attempts and stated, "We have been prepared for the possibility of hacking since the early stages of the campaign formation."