The USA has passed a bill to ban Chinese business in American Stock Exchanges
A bill has been passed by the US Senate that could possibly block some Chinese companies from selling shares on American stock exchanges. The bill requires that foreign firms adhere to US standards for audits and other financial regulations. However, it is yet to be passed by the House of Representatives before being made a law by President Trump. It comes in the wake of increased tensions between the US and China over the novel coronavirus pandemic.
This planned legislation also requires that publicly traded companies reveal whether they are affiliated to, owned or controlled by another government. The bill applies to all foreign companies, but is targeted at China, and comes after deep criticism of Beijing by President Trump and some other US politicians. Donald Trump and officials in his administration argue that China mishandled the coronavirus outbreak in its early stages. The outbreak has now developed to become a pandemic that has claimed the lives of almost 330,000 people worldwide and crippled the global economy.
US-listed Chinese companies have already come under intense scrutiny in recent weeks after Luckin Coffee revealed that an internal investigation revealed hundreds of millions of dollars of its sales last year were “fabricated”. The company said its own investigation exposed that made up sales from the second quarter of last year to the fourth quarter amounted to about 2.2bn yuan ($310m; £254m). That equates to about 40% of its estimated annual sales. The Chinese coffee chain has since this incident fired its chief executive and chief operating officer, while six other employees who were alleged to have been a part of, or known about the transactions, have been suspended or put on leave.
The scandal-hit firm has said it has been co-operating with regulators in the US and China, who have started an investigation into the company. Luckin’s Nasdaq listing had been one of China’s few successful US stock market debuts of 2019. According to Luckin, the Nasdaq exchange had notified the company of plans to de-list it due to concerns over the alleged fabricated sales and disclosure failures. The scandal-hit firm’s shares, which had been suspended since 7 April, plunged by more than 35% after they resumed trading earlier this week.
The resumption to business is as a result of all fifty states in the United States making advances towards reopening and gradually getting back to normal life even though the confirmed cases are over 1.5 million.
On Wednesday, Connecticut became the last state to lift restrictions when it gave the green light to shops and restaurants to operate under certain conditions. However, wide discrepancies remain between the states in terms of infection rates and the pace of their economic restart. Quiet a number of them have not met the federal guidance on how to reopen, including a 14-day “downward trajectory” of cases.
In 60 pages of guidance released by the Centers for Disease Control this past weekend, the center provides detailed guidance to particular sectors. For example, in restaurants, the CDC advises establishments to open first with limited seating to allow for social distancing, and assign higher-risk workers to roles that limit their interaction with customers.