The unanimous vote in the House of Representatives to approve legislation that would likely lead to the delisting of hundreds of Chinese companies trading in the U.S. is a symbolic blow to financial relations between the two countries.
But it isn’t the same sort of material blow to China Inc.’s ability to raise capital that it would have been when the subject was discussed a decade ago.
When the subject reached the attention of the House financial-services committee in 2010, it was years before the launch of the two Hong Kong Stock Connect channels, which allow investors based in the city to buy stocks listed in Shanghai and Shenzhen.
The value of those A-shares held by foreigners has risen to new records repeatedly this year. As of the end of November, the figure reached about $354 billion, up 65% year-over-year. That’s still less than 4% of the total market, leaving considerable room to grow.
There is very little indication that companies would be unduly damaged or restrained if they had to rely on Hong Kong listings. Most major Wall Street investors have outposts in Hong Kong and could easily purchase any delisted company’s secondary-listed stocks there.