US Senate has passed a bill that could delist some major Chinese firms from selling shares in American stock exchanges. This marks the recent move which has escalated the feud between two nations who have been questioning each other’s response to the coronavirus pandemic.
As per the new bill would require oversees firms to follow US standards for audits and other financial regulations. The planned legislation would also require publically traded companies to reveal if they are owned or controlled by a foreign government. The bill now requires to be passed by the lower house-house of Representatives- before it could be signed by President Donald Trump. The bill does not mentions China specifically, however, experts have suggested that the bill is targeted towards Chinese firms.
This comes days after Luckin coffee scandal that has increased US’ scrutiny over Chinese businesses. Last month, the Xiamen based coffeehouse chain, reportedly announced that an internal investigation had found that its chief operating officer, Jian Liu, had fabricated the company's 2019 sales by "around RMB2.2 billion" leading to a slump in its shares. On April 8, the US stock market halted trading on all Luckin shares as a result of the fraud probe.
Initiating further investigation, the coffeehouse company suspended its chief operating officer Jian Liu and several other employees reporting to him. Luckin Coffee said that the preliminary stage of the internal investigation indicates fabrication of sales from the second quarter of 2019 to the fourth quarter of 2019 amounting to around 2.2 billion yuan ($310 million).
The Nasdaq-listed company warned the investors that they should not rely on the previous financial statements and earnings releases for the nine-months period ending in September 2019. After the company released the findings of the preliminary investigation, the stocks of Starbucks challenger nosedived around 10 per cent on Nasdaq.
(Image credits: AP)