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Frequent Contributor

Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

https://finance.yahoo.com/news/vanguard-nyse-set-weigh-u-040000373.html

"The U.S. financial titans are among firms participating Thursday in a Securities and Exchange Commission event that’s being held to debate the potential perils Americans face when investing in China and other emerging markets."

There is just no way to keep the Chinese at bay using trade as the weapon against China. The whole world is intertwined now. I read a story that Angela Merkel is looking toward east (China) instead of unreliable trading partner (US).

People here can shout all they want but it ain't to happen.

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Re: Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

I don't know whether Wall Street (including Vanguard, Nasdaq, and the NYSE, who were mentioned in the story, and all their cohorts) will win this one, but the requirement for audits came after Enron in 2001, and does not discriminate against Chinese companies specifically.  

That requirement appears reasonable to me, and I certainly would not want to invest in a company that is unwilling to open their books to the auditors.  In my opinion, the SEC has been failing its duty to investors by allowing companies to list without requiring audits.  Better late than never.

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Frequent Contributor

Re: Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

I am with Vanguard  but do not have any foreign ETF/fund/bonds. All my investments are local index ETFs, CEFs, and BDCs.

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Participant ○○○

Re: Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

The managers of active funds can decide whether they trust the managements of Alibaba et al.  I can decide whether to trust those managers' judgements.  No audits necessary.

Index investors on the other hand - need to know that the books are clean, and therefore the market value of the shares is not based on fraudulent information. Vanguard really should not be opposing audits IMO. I largely invest with VG too.

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Frequent Contributor

Re: Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

Lol: after all the turmoil in Hong Kong why would US investors flock to unregulated Chinese stocks registered in Hong Kong?

How about this compromise: Chinese co can be listed on US stock exchanges without complying with US Accounting rules provided that any US regulated brokerage that allows US investors to buy Chinese companies will be liable to reimburse their investors for 100% of losses Incurred due to violation of US accounting/securities laws By the Chinese co.

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Frequent Contributor

Re: Vanguard Pushes back on the Capital Hill and Administration on NYSE trading of Chinese companies

Years ago, the US waived some rules to attract Chinese listings here. Even the HK rules then didn't allow listings on HK Exchange [due to multiple classes, etc]. So, many Chinese companies are only listed in the US [but not on China Mainland Exchanges or HK Exchange]. Ironically, the HK has now relaxed its listing requirements, so many of these Chinese companies would also list in the HK, and/or also in the UK.

In spite of China allowing foreign investors to buy Chinese A-shares, these investors have to play by Chinese rules and processes, and Vanguard has done that leg work early. So, when MSCI started adding more China A-shares [a multiyear gradual process], Vanguard could use those but many other fund firms just ignored the new/updated MSCI indexes as they didn't have proper Chinese clearances.

The Fed TSP was going to go with MSCI all-country index for its I Fund, but due to political opposition it may stick with MSCI developed-countries index longer. There may also be a MSCI all-country ex-China or capped-China index.

YBB
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