Alibaba Group, Tencent Holdings, and several other Chinese-owned stocks saw an increase in their price after some hopeful reports. These reports indicated that the Chinese regulators are very close to a deal that will allow the auditors to look at the records of U.S.-listed Chinese stocks.
It's been several years since these companies have been at risk of being delisted from the US exchanges due to not making their records public.
However, it seems that the two countries are now very close to reaching an agreement. This will allow accounting companies and firms to transfer their audit working papers from China (mainland) to Hong Kong. Once this process is complete, the regulators will then visit the city to look at the records.
Although the arrangement seems like a lot of work, if it works for the 2 countries, then there is nothing not to like about it!
The Chinese stocks, which are also listed on the US market, were under pressure by the SEC. The securities and exchange commission was even ready to delist the Chinese companies refusing to open their financial books.
In fact, a total of 5 states listed Chinese companies have already delisted their stocks voluntarily from the U.S. markets. But it seems that Alibaba and other companies will open their financial records to the authorities.
Alibaba Group (BABA), Tencent, and JD stocks were all higher (5% - 9%) after this news was reported by various media outlets.
However, we can not say anything with certainty at this stage. The deal is yet to be announced officially, and considering the geopolitical temperature; anything can happen anytime!
Recently, the China has also announced a fiscal stimulus package for the companies. In total, the country is ready to pour in $146 billion (1 trillion yuan) into the economy.
If the deal goes through, it will also bring a sense of relief to the investors of these stocks. If these companies were delisted, it would have made a serious dent in their stock prices at home.