US-China Trade War Arrives On The Stock Market

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US-China Trade War Arrives On The Stock Market

The United States government has announced that it is looking into plans to delist Chinese companies from the New York Stock Exchange to discourage and decrease US investment in Chinese companies.

This is just the latest in a long line of threats made by the United States towards China in their ongoing rift about trade between the countries.

China has long been a favoured target of President Trump and despite ongoing talks between delegations from both sides, there seems to be no end in sight to this battle of trade.

Dollar Impact

In response to the announcement, the US Dollar finished on down from the previous day, with share prices in prominent Chinese companies like Alibaba and JD.com also dropping sharply after the announcement was made, around 5 and 6 per cent respectively.

Pensions

Alongside limiting the number of American investments in Chinese companies, the US government also stated that they would be looking into limiting the ability of federal pension funds to participate in Chinese markets.

In the US alone, over 150 Chinese companies are listed on America’s most prominent stock markets and benefit hugely from international investment from the US.

The same can be said for some American companies, many of whom have shares owned by larger Chinese investors.

Experts estimate these Chinese companies to be valued at around $1.2tn in the United States, making them a prominent asset to investors.

Policy Backlash

As with many of the current administration’s announcements, this new statement was met with criticism in both countries. Republican members of the Senate questioned the validity of the plans, stating that it would actually put US investors at risk.

Chinese companies are under no requirement to give US investors audits of their financial statements, increasing the risk of investment significantly.

Officials between the US and China are due to meet again in October for another round of trade discussions, but there is little optimism as to whether this will bring a viable solution to the disputes.

President Trump has continuously attacked China by placing large tariffs on the country – though many experts have been quick to suggest they do more harm domestically than good.