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Pro Perspectives 5/20/20

May 20, 2020

The Senate passed a bill today which could require Chinese firms, listed in the U.S., to de-list from U.S. exchanges or agree to audited financial reporting, just like any other company listed on U.S. exchanges.

This still has to go through the house.  But if this passes, this would likely lock out a lot of big Chinese companies from U.S. capital markets. Among them, one of the biggest e-commerce platform company in the world, Alibaba.  And China’s biggest e-retailer, JD.com.  This, while BABA’s stock is just 6% off of all-time highs, and JD.com was sitting on record highs. 

This is another huge signal that the trade war of the past two years, may be considered moot in the very near future.  The U.S. appears to be going to full protection mode, to counter the three-decade economic war that China has used to ascend from a $350 million economy, to the second largest economy in the world.  

For a country (the U.S.) that is just beginning to turn demand back on, through re-opening of businesses, this dynamic of increasing conflict with China, doesn’t bode well for an already disrupted supply chain.  We may find that the timeline for bringing manufacturing back home, will be much quicker than anyone expects — out of necessity to meet basic needs.   

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