GOOD MORNING FROM LONDON
In January 2021 China Telecom was ejected from the New York Stock Exchange – to be joined by China Mobile + China Unicom. This was caused by an Executive Order signed by former US President Trump in order to pressure China to change its confident policy of Standing Up.
US Regulators will introduce new disclosure rules for Chinese firms seeking US Initial Public Offerings + have threatened to delist those not complying with the US accounting standards.
There is an over-arching geopolitical context. China continues to rise as the US goes into relative decline. The US has “Big Ego” Issues. It has been #1 World Economic Power. It wants to continue as #1. China challenges the US. The US wants to bring China to heel. Hence increases in trade tariffs + more obstacles to China using Wall Street to secure US money to fund China’s future development.
It isn’t working. China is not hurting. Companies barred from the US are encouraged to raise capital in Shanghai Shenzhen + Hong Kong as China looks to fill the gap with the deep pool of household savings that will invigorate Chinese Capital Markets. China Telecom’s IPO in Shanghai is predicted to raise US$8.4bn. It is this development that has led to big investments in China by Goldman Sachs, JP Morgan and other leading Finance Institutions to penetrate Mainland Domestic Savings. They are not Decoupling from China. They are increasing their investment in China.
So Decoupling becomes Homecoming. The US investor will be denied the opportunity to invest in China because of Trump/Biden. The phrase “Shooting Yourself In The Foot” comes into view. The slack will be taken up by Chinese investors
China prefers co-operation. Its policy of Win-Win guides its actions going forward. There has to be mutual benefit + economic co-operation. The US will come to the same view – eventually