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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 face the risk of being delisted in the US by 2024 if their audit information is not provided to PCAOB inspectors.

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Investors can regain confidence to put money in Chinese tech stocks as these companies avoid being delisted from US stock exchanges and the Chinese government, according to an investment manager. National commitment to policy support.

Last week, the US accounting watchdog, the Public Company Accounting Oversight Commission said have full authority to inspect and investigate Chinese companies for the first time, after China finally granted access to the United States in August.

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More than 100 Chinese technology companies such as alibaba, Baidu and JD.com was in danger of being delisted in the US in 2024 if their inspection information is not provided to the PCAOB inspector.

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

“That will allow institutional investors to come back in. Professional investors are very scared of this delisting risk, that’s why they’re on the sidelines,” said Brendan Ahern, director. investment by US-based investment management firm KraneShares, told CNBC “Asian Squawk Box” on Wednesday.

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As of September 30, there were 262 Chinese companies listed on US exchanges with a total market capitalization of $775 billion, according to the US-China Economic and Security Review Commission. Country.

“With that risk going away based on the PCAOB announcement, you should see investment money flowing back into these names,” Ahern said.

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

But he also warned that there are still “early days, weeks, early months to see that capital return to space.”

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But he also noted policy support would help spur growth for these companies. Last week, China pledged to increase domestic consumption next year, as the country moved to boost growth after withdrawing from its Covid-free policy.

“The year 2023 is a year where we will receive a lot of support from government policy such as increasing domestic consumption,” said Ahern. “About 25% of all retail sales go through companies.”

“The Chinese government really needs these internet companies, which explains why we see a setback to some of the regulatory scrutiny we went through in the past,” Ahern said. year 2021”.

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