Why China Helped Private Firms to Retain U.S. Listings
Tomorrow’s Headlines Today 09/01/2022
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Contradicting PMI Trends in August
Why China Helped Private Firms to Retain U.S. Listings
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The Empire Strikes Back: ICBC Bank Made More Money Than PetroChina
Contradicting PMI Trends in August
According to the National Bureau of Statistics (NBS), China’s Manufacturing Purchasing Managers Index (PMI) reached 49.4%, up 40 basis points MoM but still below the key threshold of 50%. All five sub-indices in the PMI were also below the threshold. Source: National Bureau of Statistics (国家统计局网站)
Qi’s take: In comparison, the non-official Caixin/Markit PMI declined (not increased) to 49.5% in August from 50.4% in July, and missed the consensus forecast of 50.2%. This may be a more accurate figure suggesting a slowdown – not a pickup – in the manufacturing activities. This confirms China’s 5.5% GDP growth target this year is unlikely to be reached.
Why China Helped Private Firms to Retain U.S. Listings
U.S. regulators have picked companies including Alibaba Group (BABA, 9988.HK) and Netease (NTES, 9999.HK) in the first round of audit inspections. Other firms selected include Baidu (BIDU, 9888.HK), JD.com (JD, 9618.HK) and Yum China (YUMC, 9987.HK), according to two people with direct knowledge of the matter. The US Public Company Accounting Oversight Board (PCAOB) requested to review materials from the latest financial year, one of the people said. The company list is still subject to change. Source: Bloomberg (彭博)
Qi’s take: China made a compromise by signing the audit inspection agreement with the U.S., while allowing the state-owned companies (SOEs) to delist from America at the same time. What’s going on here? It’s easy to see why China doesn’t want its SOEs listed in the U.S. anymore, so as to remove these companies from the U.S. audit review. But why did China go out of its way to sign this deal and help private companies like Alibaba, Baidu and JD.com to keep their U.S. listings? Isn’t China trying to “crack down” the Internet sector?
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