WEBVTT - Lulu Chen on U.S, China Delisting Talks (Audio)

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<v Speaker 1>Well, talk seem to be gathering pace here between Beijing

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<v Speaker 1>and Washington to avoid the de listing of Chinese companies

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<v Speaker 1>from New York. And what it seems to be is

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<v Speaker 1>that they're looking to let US inspectors travel here to

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<v Speaker 1>Hong Kong and review these audit papers of Chinese businesses.

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<v Speaker 1>Joining us now is Lu lu Chen, Bloomberg's Asia investing

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<v Speaker 1>and real estate team leader. So, Lulu, we're reporting this, uh,

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<v Speaker 1>and do we see this as a breakthrough happening or

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<v Speaker 1>is this just incremental progress on this story. So what

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<v Speaker 1>we've been told is that Chinese regulators have instructed major

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<v Speaker 1>accounting firms to prepare to bring the audit work papers

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<v Speaker 1>UM to Hong Kong where they can be reviewed by

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<v Speaker 1>the auditing board of the U s UM. For the US,

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<v Speaker 1>my understanding is that nothing has changed. The SEC has

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<v Speaker 1>always had a tough stance saying it's all access or

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<v Speaker 1>nothing UM. So the progress is really from a development

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<v Speaker 1>from kind of part where they are giving out these

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<v Speaker 1>instructions and it seems like there is some action on move. Yeah,

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<v Speaker 1>we've seen we've seen progress in the past, kind of dissipate.

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<v Speaker 1>You'd think that investors would be one bit and twice shy,

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<v Speaker 1>but they are they are buying into this story, and

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<v Speaker 1>I think it's important to report that we we don't

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<v Speaker 1>have any comment from the SEC. We also don't have

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<v Speaker 1>any comment from the China Securities Regulatory Commission. Uh So

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<v Speaker 1>it's it's very much up in the air. But progress

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<v Speaker 1>is progress, and it seems like this this is a

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<v Speaker 1>little bit of a breakthrough having US inspectors beyond somewhat

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<v Speaker 1>neutral ground in Hong Kong Um. Yeah, it does seem

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<v Speaker 1>like there is some progress. Something is happening, and I

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<v Speaker 1>can understand why there is a there is pressure to

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<v Speaker 1>get a deal out because the clock is ticking. Um.

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<v Speaker 1>The post deadline for four is going to happen if

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<v Speaker 1>they don't reach these agreements the end of the year. UM.

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<v Speaker 1>Auditing these papers will take time as well. And there's

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<v Speaker 1>a lot of money at risk here. As of March,

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<v Speaker 1>there were one point five trillion dollars worth of companies

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<v Speaker 1>Chinese companies listed in the US, so a lot at

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<v Speaker 1>stake here, Lulu. We know that Chinese companies can raise

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<v Speaker 1>a lot of money in Hong Kong Um and they

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<v Speaker 1>can raise money in China as well. Why is the

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<v Speaker 1>US so important to these companies. The US has always

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<v Speaker 1>been a more UM preferred route for Chinese companies to list,

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<v Speaker 1>especially for the tech companies and companies that have a

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<v Speaker 1>less established model, especially a less established profit model. UM.

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<v Speaker 1>Here in Hong Kong, you can see that the most

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<v Speaker 1>of the companies that do well are traditional businesses, so

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<v Speaker 1>that UM that sector UM, the new economy sector that

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<v Speaker 1>has really created some of the world's largest companies. Traditionally

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<v Speaker 1>most of them have been listed in the US. There's

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<v Speaker 1>a lot more liquidity UM in New York as well UM,

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<v Speaker 1>and also UM the investor composition is just a lot

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<v Speaker 1>more different institutional investors dominate the US UM New York

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<v Speaker 1>Stock Exchange in NASTAC, whereas here in Hong Kong there

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<v Speaker 1>there is UM less of that. So so I think

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<v Speaker 1>like for companies and investment banks which make a bigger fee,

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<v Speaker 1>the US has been the traditional preferred route. Lulu, thanks

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<v Speaker 1>very much for joining us. Here Live Lu lu Chen,

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<v Speaker 1>Bloomberg's Asia Investing and Real Estate team leader