Chinese state media claimed Tuesday that Chinese tech companies “spooked” by the Trump administration’s threats to “throw its weight around” are hurriedly making plans to bring their capital home.
“The U.S. government’s wanton and ill-explained closure of the Chinese consulate in Houston has further worsened China-U.S. relations. U.S. politicians are now pushing tensions into the financial arena, which poses a severe threat to the legitimate interests of Chinese companies listed in New York,” China’s state-run Global Times editorialized.
According to the Global Times, the Trump administration is squandering a golden opportunity created by the “inclusive” capital markets of the Obama era. Although the article quoted analysts who said Chinese companies are more eager than ever to file IPOs in the U.S. and list themselves on the New York Stock Exchange, the Global Times insisted Chinese executives are all making quiet plans to flee back to the “maturing” capital markets of their homeland after the shutdown of the Houston consulate rattled their confidence in the American system.
The Global Times, and all other Chinese state media, insinuate the closing of the Houston consulate was an inexplicable act of random belligerence by the United States, not a carefully considered action based on well-founded concerns about espionage activities coordinated through the diplomatic facility.
Beijing financial regulators are “planning to comb through U.S.-listed Chinese firms and support those willing to return to the A-share or Hong Kong markets,” the Global Times added.
“The Shanghai Stock Exchange in June also issued new regulations to support the return of U.S.-listed Chinese companies to the Shanghai Sci-Tech Innovation Board, or STAR market. A new share index focused on Chinese tech giants has been launched by Hong Kong’s stock market,” the article added.
China might soon have the Hong Kong stock exchange all to itself, as foreign companies flee in droves after Beijing crushed the island’s autonomy with an oppressive national security law. China is making efforts to turn Shanghai into an alternative financial hub, the new front lobby for nervous foreigners who seek lucrative contracts with China, Inc.
Hong Kong might not be finished as a foreign business hub just yet. The new share index referred to by the Global Times is modeled on the NASDAQ and is designed to bring in more “passive investors,” meaning people who invest through large funds that build diversified portfolios of international stocks.
In theory, this buffering could secure indirect investments from foreigners who might have moral qualms, or practical security concerns, about picking Chinese Communist stocks individually. The system can also help Chinese investors use the Hong Kong index to pour money into funds they might otherwise have difficulty accessing.
The South China Morning Post reported on Wednesday that the Shanghai and Hong Kong stock markets rose this week thanks to bargain-hunting investors anticipating a general market recovery. One billion dollars of foreign capital flowed into China through the Hong Kong index after several sessions of net loss, dominated by long-term investment funds.
Those funds seem eager to get back into bed with China despite a cautionary tale playing out at his very moment: Europe’s HSBC bank is under fire from telecom giant Huawei — which, like all Chinese corporations, is an arm of the Chinese Communist Party — because HSBC supposedly presented “misleading evidence” that led to the arrest of Huawei CFO and Communist Party royalty Meng Wanzhou by Canada for extradition to the United States on fraud charges.