(Yicai Global) Oct. 11 -- Keeping the door open to Chinese companies is in the best interest of the US, the chief executive of Nasdaq said following reports that the Trump administration was considering ways to limit China's access to US capital markets including booting Chinese businesses from its stock exchanges.
"The good news is the administration actually backed off of that statement and basically said that is not what they are considering doing," Adena Friedman said at the Yahoo Finance All Market Summit in New York yesterday.
"It's in our interests and our economic interest to keep our markets open, to continue to be that land of opportunity, and to make sure that we maintain our role as the most resilient and most dynamic markets in the world," she said. "If Chinese companies are no longer able to access US markets, their opportunity would be to go to London or to go to Hong Kong, so they do have other avenues, or to list in China."
The US government was looking at ways to limit capital flow to China, Bloomberg and other media outlets reported at the end of last month, citing unidentified people familiar with the White House's discussions and plans. Stocks in several US-listed Chinese firms dived on the news, including shares of e-commerce giants Alibaba Group Holding and JD.Com, live-streaming platform YY fell and electric carmaker Nio.
US Government Denial
"The administration is not contemplating blocking Chinese companies from listing shares on US stock exchanges at this time," Bloomberg quoted US Treasury spokeswoman Monica Crowley as saying on Sept. 28. White House Trade Advisor Peter Navarro told CNBC on Sept. 30 that the Bloomberg report was "fake news" and "highly inaccurate."
The Nasdaq, which owns and runs the world's second-largest stock market, was quick to distance itself from the alleged deliberations in Washington. "One critical quality of our capital markets is that we provide non-discriminatory and fair access to all eligible companies," a spokeswoman told Reuters on Sept. 29.
Though Chinese firms are not being forced to delist, initial public offering submission requirements are getting tougher. The Nasdaq is asking more detailed questions and slowing down approval times, a lawyer who has handled multiple listings for Chinese firms told Yicai Global. In fact, in the current stricter climate, many companies seeking to list in the US are adopting a wait-and-see attitude, the lawyer added.
The stock prices of many companies, some Chinese, have fallen below their IPO prices since going public on the Nasdaq. Investors are questioning whether these firms meet the listing requirements or if the Nasdaq has relaxed its review standards.
The success of companies is not measured by their share price after listing, but by whether they are building a model with potential that provides value to their customers and shareholders, Friedman said.