The Holding Foreign Companies Accountable Act (HFCAA) was passed by the US Senate in 2020 to address the issue of Chinese companies not complying with US auditing standards. The law requires companies to disclose whether they are owned or controlled by a foreign government and to allow US regulators to review their financial audits. If a company fails to comply, it could be delisted from US stock exchanges.
According to the TCW Group, most Chinese companies listed in the US are not in compliance with the HFCAA. As a result, they are at risk of being delisted, which could have serious consequences for both the companies and investors.
Experts warn that delisting could lead to a significant drop in a company’s stock price and make it more difficult for investors to trade their shares. It could also make it harder for Chinese companies to raise funds in the US, as well as damage US-China relations.
The TCW Group advises investors to pay close attention to the compliance of Chinese companies with US auditing standards and to consider diversifying their investments to mitigate the risks of delisting.
In conclusion, tensions between the US and China continue to have far-reaching consequences, including the potential delisting of most Chinese companies from US stock exchanges. The HFCAA could have significant implications for both companies and investors, and experts advise caution and diversification to mitigate the risks.
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