US bill aimed at forcing certain Chinese companies to delist from US Securities exchanges to become more prominent but investors should welcome it if it becomes law
- Foreign companies will have
to prove that they are not government owned or controlled
- 156 Chinese companies on
17th August, 2020, London
The S. 945 - Holding Foreign Companies
Accountable Act, which was passed by The US Senate in May this year and aims to
require certain issuers of securities in the US to establish that they are not
owned or controlled by a foreign government, has moved down the legislative
priority list. However, Kevin Carter,
Founder of EMQQ – The Emerging Market Internet & Ecommerce UCITS ETF,
says that with the upcoming US Presidential elections and growing tension with
China, it should resurface and become a bigger priority in the coming months
Kevin Carter, CEO of EMQQ said:
“Public Chinese companies that do not adhere to U.S. accounting rules or
disclose government ownership or control, especially by the Chinese Government
or Communist Party, run the risk of being de-listed from U.S. securities
exchanges if the bill becomes law. With
the US Presidential elections coming up later this year, and growing tension
between the US and China, the chances of this happening are increasing.
“However, investors should
welcome this as it could flush-out several ‘bad-actors’ in the space and help
validate the rest.”
There are some 156 Chinese
companies listed in the US being reviewed.
11 of these are Chinese State Owned, and approximately 100 are ‘penny
stocks’, with most trading on the NASDAQ Global Market or NASDAQ Capital Market.
The Emerging Market Internet & Ecommerce UCITS ETF, which is distributed on the HANetf white-label platform, delivers
exposure to an index of leading companies driving the growth of online
consumption in the developing world. To be included, companies must derive more
than half their profits from Ecommerce or internet activities, including search
engines, online retailers, social networks, online video, online gaming,
e-payment systems and online travel.
Unlike most emerging market indices the companies included do not need
to be listed locally.
The EMQQ UCITS ETF delivered 9.08%
in July 2020, 44.72% YTD and 59.93% in one year. Past performance is no guarantee of future
performance. When you trade ETFs your capital is at risk.
EMQQ is listed on London Stock
Exchange, Borsa Italiana, XETRA and SIX and has a TER of 86bps.
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