China Stocks Delisting Threat Grows For Alibaba, JD.com, Nio Amid House Vote, Kandi Fraud Allegation
New fraud allegations against Chinese electric-vehicle maker Kandi Technologies come at a particularly bad time for Wall Street. On Wednesday, the House has scheduled a vote on the Holding Foreign Companies Accountable Act, which could lead to the eventual delisting of Alibaba stock,JD.com(JD),Nio(NIO) and other China stocks.
The bill, which already cleared the Senate in May, could kick Chinese companies off U.S. exchanges within three years. That would happen unless their auditors come under supervision of the Public Company Accounting Oversight Board.
Yet Beijing has made it illegal for Chinese auditors to submit to such scrutiny from an overseas regulator, seeing it as an impingement of national sovereignty. With House passage of the HFCA bill looking certain, China's hard line would seem to doom the U.S. listings of China stocks with a combined value of more than $2 trillion.
However, Congress may not have the last word, says Derrick Scissors, resident scholar at the American Enterprise Institute. "Treasury controls implementing regulations for whatever Congress passes," Scissors told IBD.