US to Impose Capital Controls?

[Nomad]

https://www.reuters.com/article/us-usa-trade-china-limits/trump-considers-delisting-chinese-firms-from-u-s-markets-source-idUSKBN1WC1VP

 

President Donald Trump’s administration is considering the possibility of delisting Chinese companies from U.S. stock exchanges, a source briefed on the matter said on Friday, in what would be a radical escalation of trade tensions between the two countries.

 

The move would be part of a broader effort to limit U.S. investments into China . . .

 

I can't imagine this is a positive for the US real estate market. Foreign FDI has been driving price appreciation at the top end of the market for years and limiting the ability of Chinese nationals to invest in US properties seems like an easy way for the Chinese government to retaliate.

[John Hjorth]

Somebody must be out of their friggin' mind here. This will create totally random casualties among investors. Now we just need to see "Decree # XXXX" on resolutions from the POTUS, and we'll be "full circle". Something similar vented about US [and non-US!] ADRs based on Russian stocks, I think it was last year [just the other way around].

 

Trump derangement syndrome has a totally different inherent meaning to me than to so many others.

[Spekulatius]

Somebody must be out of their friggin' mind here. This will create totally random casualties among investors. Now we just need to see "Decree # XXXX" on resolutions from the POTUS, and we'll be "full circle". Something similar vented about US [and non-US!] ADRs based on Russian stocks, I think it was last year [just the other way around].

 

Trump derangement syndrome has a totally different inherent meaning to me than to so many others.

 

I beg to differ somewhat. I don’t condone  restricting investing in China, but I can understand to forbid the nefarious VIE structures via letterbox holding companies in tax havens for listed companies. The fact is that as an investor in BABA and all these listed companies, you do not own these companies directly, own a contractural right (anyone ever seen these contracts, because I haven’t ) via a multilayered hold8ng structure while in realty a Chinese person or entity really owns this.

 

This was done to get around the problem that the Chinese government does not allow direct ownership of Chinese companies in many sectors to foreigner. It is also a structure that is ideally set up to scam foreign investor out their money without any recourse. so, I think a case can be made that the US should not allow this structure for US listed stocks and the Chinese have a choice either to change their ownership  rules ( just like most other countries) and allow foreign ownership and essentially open their capital markets, or those companies delist and trade in the OTC markets.

[meiroy]

 

 

This is an issue that has been going for a while now and the PCAOB has been trying to negotiate but failed.  US regulators should be able to audit and access information of companies that are listed in the US, and if they are not allowed to, these companies should not be listed. It's as simple as that.

 

 

[mcliu]

Somebody must be out of their friggin' mind here. This will create totally random casualties among investors. Now we just need to see "Decree # XXXX" on resolutions from the POTUS, and we'll be "full circle". Something similar vented about US [and non-US!] ADRs based on Russian stocks, I think it was last year [just the other way around].

 

Trump derangement syndrome has a totally different inherent meaning to me than to so many others.

 

I beg to differ somewhat. I don’t condone  restricting investing in China, but I can understand to forbid the nefarious VIE structures via letterbox holding companies in tax havens for listed companies. The fact is that as an investor in BABA and all these listed companies, you do not own these companies directly, own a contractural right (anyone ever seen these contracts, because I haven’t ) via a multilayered hold8ng structure while in realty a Chinese person or entity really owns this.

 

This was done to get around the problem that the Chinese government does not allow direct ownership of Chinese companies in many sectors to foreigner. It is also a structure that is ideally set up to scam foreign investor out their money without any recourse. so, I think a case can be made that the US should not allow this structure for US listed stocks and the Chinese have a choice either to change their ownership  rules ( just like most other countries) and allow foreign ownership and essentially open their capital markets, or those companies delist and trade in the OTC markets.

 

Agreed. There's zero recourse for these structures. It's a trade based on hope. It's unfortunate so many shareholders are seduced by the fast-growth of these big Chinese listings.

 

I wonder if there's a study that summarizes how much capital Chinese firms have been able to raise in the US vs how much capital actually returned through dividend/buybacks to investors.

 

The China Hustle is a good documentary to watch. Most of the firms were smaller and were outright accounting scams, but it highlights the lack of recourse to investors and repercussion to "management". https://en.wikipedia.org/wiki/The_China_Hustle