The threat to remove China from US exchanges is growing

Those exposed to Chinese ADRs – if he is a Chief Executive Officer of a Chinese company listed in the United States or a variable income strategist with the China Market – now consider a question: will the United States really hit Chinese companies in their bags?

Some of China’s largest companies market in the United States, including JD.com (No. 47 in the Fortune Global 500), Alibaba (No. 70) and PDD Holdings (No. 442). But these much smaller giants and many companies could have their existence as American trade companies threatened by a trade war revived against Beijing launched by United States President Donald Trump.

Last week, several republican members of the Congress, including representative John Moolenaar, chairman of the Selection Committee of the Chinese Communist Party House,, wrote recently designated Paul Atkins, President of the Securities and Exchange Commission, “to express a great concern about the continued presence of Chinese companies on the United States”.

In a letter reported by it Financial time, The legislators indicated Chinese companies listed by the United States, large and small, from giants such as Alibaba and JD.com to smaller startups such as the EV XPENG brand and the self-tondy vehicle supplier Pony.ai.

“Everything is on the table”

Concerns to eliminate have grown Since the end of FebruaryWhen Trump revived the threat of kicking Chinese companies in North -American exchanges to their “America First Investment Investment Plan.” In his note, Trump ordered officials to determine if Chinese companies were maintaining US audit standards and investigating structures These companies use to list in foreign bags.

Since then, administration officials have declined to rule out actions against Chinese companies listed in the United States, with Treasury Secretary, Scott Bessent, said in a television interview in mid -April that “Everything is on the table. “”

“The threat is growing significantly,” says Sandeep Rao, a researcher at Leverage Shares.

Nasdaq’s Dragon Golden China Index, which traces Chinese companies in the United States, has dropped around 7% since “Liberation Day”. In comparison, Hong Kong’s Hang Seng Tech index, which traces technology companies marketed in the Chinese city (including some that also sells in the United States), reduced by 4.6% in the same period.

Chinese companies have long traveled to the U.S. deep and liquid markets to collect capital. Alibaba IPO on New York Stock Exchange in 2014 raised $ 25 billionThe largest IPO in the world at that time, and only replaced by the List of Saudi Aramco 2019 in Riyadh.

At the end of March, 286 Chinese companies are in North -American exchanges, with a total market value of $ 1.1 trillion, according to change data cited by the Morning Morning of South China.

However, North -American investors have deepened the poor audit standards among Chinese companies. Technically, the companies that appear in the United States must open their books to the North -American regulators, but Chinese officials often have this access to national security. The 2020 revelation that the Chinese coffee chain Luckin had inflated its sales was the last straw of the congress, which approved the responsible act of foreign companies that ordered Chinese companies to grant access to North -Americans’ regulators or the risk of U.S. exchanges.

After years of negotiations, China in 2022 agreed to let go of the regulators reviewing audit documents in the Chinese city of Hong KongRaising the threat and calmness of the investors.

However, damage had already been made, as Chinese companies listed in the United States began to explore secondary listings in Hong Kong. Last year, Alibaba updated his Hong Kong list To a primary list, allowing the Chinese Electronic Commerce Company to play continental Chinese investors through the southern connection regime of the city.

Some investors “have been changing to keep the north -American score on Hong Kong ticker because of misfortune threatening,” says Rao.

Hong Kong could be a winner

In mid-April, Goldman Sachs estimated that US institutional investors maintain actions for about $ 830 million in Chinese companies, distributed by the continental Chinese, Hong Kong and American markets. About $ 250 million are found in Chinese ADR.

However, “the variable income stakes by foreigners, in particular the holders of the United States, have significantly dropped versus where we were five years ago,” said Cameron Chui, a Jpmorgan Private Equity strategist, during an informative session on Wednesday to journalists when asked the possibility of diverting. “The risk has been significantly reduced.”

Rao states that North -American investors could still maintain negotiation in Chinese companies, even if they are released, only at the OTC market less protected. Tincent, one of the largest technology companies in China, has its main list in Hong Kong, but also traces of the United States OTC market.

In the meantime, Chinese companies already whisper other options. In a conversation with journalists outside the Shanghai Automobile Show, Pony.AI’s CEO, James Peng Hong Kong was possibleAlthough he stated that the startup focused on freeing its next generation of vehicles.

Geely Auto is also take your EV brand of the US List Zeekr Private, Just One year After his New York OIP, to speed up Chinese car giant operations and improve profitability.

In his mid -April report, Goldman Sachs highlighted 27 Chinese companies listed in the United States, which will probably be able to opt for a Hong Kong list (either a secondary or primary list), including PDD, Futu on the retail sales bag platform and the Full Truck Digital Logistics Platform.

But some Chinese companies are brave geopolitics to pursue a list of the United States. Chagee, a Chinese tea chain, raised 411 million dollars In an OIP in the United States, debuting at Nasdaq on April 17.

Hong Kong looks like a more attractive place, or at least a less bad place, to market actions. A main list in the city opens the possibility that the continental Chinese investors will listen to the company’s actions. Flows in a southerly direction (ie, from continental China to Hong Kong) increased in recent monthsas continental Chinese investors who are neighboring The ai boom represented by companies such as Alibaba and International Semiconductors’ Manufacturing Corporation.

“It is quite reasonable to have at least a secondary list in Hong Kong if you are a Chinese company in the United States,” says Rao.

The city is going through a rebirth of IPO, as continental Chinese companies now expect to take advantage of global capital through a “abroad” list. Last November, at IPO of $ 4 billion per MideaThe largest manufacturer in the world of appliances began things; Mixue, an ice cream chain with more points of sale than McDonald’s, Followed in March.

Hong Kong waits at least two more blockbuster in the coming months. CATL, the main battery provider for Tesla, wait Collect $ 5 billion to Hong Kong in the near future. (JpMorgan and Bank of America help with the IPO, which has attracted a Congress scrutiny.) Chinese car maker Chery Auto is He is also preparing For a Hong Kong card will raise $ 1.5 billion.

But Hong Kong is not a perfect replacement for New York. “There is no positive. The liquidity in Hong Kong is not the same as in the United States,” Chui said Wednesday.

This story originally presented to Fortune.com

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