I don’t watch a lot of TV during the day but I happened to have caught this great interview between Joe Kernan and Carson Block this morning regarding the latest signaling from the Chinese Communist Party. They warned their version of Uber, called Didi, not to f*** around and list on a US exchange, and Didi did it anyway. This led to the banning of Didi app downloads and other instant punishments which effectively blew up the IPO as soon as it opened for trade. The ripples have been felt across the entire Chinese stock ecosystem.
Trump and Biden have both talked tough about not allowing Chinese companies the benefit of listing in our stock markets without accepting the accounting oversight that all other companies must. This looks like China peremptorily saying “Not only do we not care what you think – we’re actually going to put a stop to these listings ourselves.” Exposure to capitalism did not change the CCP culturally or make them want to be more like us. We’re on notice now.
If Carson Block is right and this is a major turning point, there could be large ramifications for US investors with exposure to Chinese stocks, US ETF and mutual fund companies, US investment banks seeking continued listing business from Chinese companies, the whole web of Cayman Islands-based VIE sponsors, index providers like MSCI, FTSE Russell and SPDJI and many others.