Chinese e-commerce giant Alibaba was one of more than 100 companies that faced the risk of being delisted in the United States in 2024 if its audit information was not made available to PCAOB inspectors.
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Investors can restore confidence to put their money in Chinese technology stocks as these companies avoid delisting from US stock exchanges and the Chinese government pledges to support the policy, according to one investment manager.
Last week, the US accounting watchdog, the Public Corporate Accounting Oversight Board, said that Got full access to search 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 Ali BabaAnd the Baidu And the JD.com It faced the risk of being delisted in the US in 2024 If their audit information is not provided to PCAOB inspectors.
Investors often grapple with the lack of transparency in Chinese stocks.
“Institutional investors will be allowed to come back. Professional investors were very scared about these write-off risks, which is why they stayed on the sidelines,” Brendan Ahern, chief investment officer of US-based investment manager KraneShares, told CNBC.Squawk Box Asia” Wednesday.
As of Sept. 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.
“With that risk removed based on the PCAOB announcement, you will see investment dollars flow back into these names,” Ahern said.
“These internet giants are really where investors want to invest when it comes to China,” said Ahern.
But he also warned that it was still “early days, weeks, months to see that capital return to space.”
But he also noted that policy support would help boost the growth of these companies. Last week, China pledged to increase domestic consumption next year, as the country heads toward boosting growth after emerging from the zero-COVID policy.
“2023 is when we’re going to get a lot of government policy support like an increase in domestic consumption,” Ahern said. About 25% of retail sales go through businesses.
“The Chinese government really needs these internet companies, which explains why we backed off from some of the regulatory scrutiny we saw in 2021,” said Ahern.
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