The Trump Administration is considering delisting Chinese companies from U.S. stock exchanges, news that rocked the markets Friday and big Chinese companies such as Alibaba.
Bloomberg first reported the delisting idea, based on unnamed sources. The White House didn’t confirm the reports or make any comment.
There are 156 Chinese companies on the Nasdaq Composite, New York Stock Exchange and NYSE American, including at least 11-state owned companies. Together they had a market capitalization of $1.2 trillion earlier in 2019. Alibaba, a large global conglomerate holding company has a market capitalization of nearly $460 billion on U.S. stock exchanges. Its stock declined 5% on the NYSE exchange on Friday.
The concept of delisting such companies apparently has the support of some administration supporters, including U.S. Sen. Marc Rubio, R-Fla. “U.S. investors, including the government-managed retirement savings of U.S. service members and other federal employees, should not fund Chinese state-owned or state-directed companies involved in the Communist Party’s military, espionage, human rights abuses and 'Made in China 2025' industrial policy—Chinese activities that run directly counter to our nation’s safety and prosperity,” Rubio said in an emailed statement on Friday.
Rubio added that the Trump Administration “deserves credit for their efforts to deal with the threat that the Chinese government and Communist Party poses to U.S. national and economic security, including how Beijing takes advantage of its access to U.S. capital markets for predatory purposes.”
Bloomberg reported that White House trade adviser Peter Navarro and former Trump chief strategist Steve Bannon support measures like delisting to limit the way that Americans unwittingly support the Chinese Communist Party. Bannon has been working with hedge fund manager Kyle Bass in leading the Committee on the Present Danger: China, which advocates economic decoupling from China to protect U.S. national security.
In a statement, Nasdaq didn’t specifically react to the idea of delisting, but said it supports “non-discriminatory and fair access” to its exchange.
Some analysts said the delisting idea might be part of a strategy by Trump Administration negotiators to appear strong before resuming trade negotiations with China on Oct. 10 in Washington.
U.S. chipmakers have been especially concerned with the outcome of the trade talks because many of them profit from sales to Chinese companies like Huawei, the world’s largest telecom equipment provider. At the same time, many of the same U.S. chipmakers hope President Trump can push China to somehow prevent Chinese electronics companies from stealing U.S. intellectual property.
Micron CEO Sanjay Mehrotra said Friday that it is “important the two countries come up with an agreement” that includes “free and fair trade” for both sides.