The ban of the US on the Chinese affiliates of the four largest accounting firms may weaken the pickup of public listings in New York by Chinese firms, Bloomberg reported.
Global X Funds Chief Executive Officer Bruno del Ama told Bloomberg that the ruling of a US judge to ban the auditors for six months could prompt Chinese firms to list in Hong Kong and not New York. The auditors said they will appeal the ruling, the report said.
This year, Chinese firms had started queuing for a New York listing after 2013 saw eight initial public offerings, representing an increase from the three Chinese listings held in 2012. This month, sources told Bloomberg that Beijing Jingdong Trading Co and Zhaopin Ltd had plans to hold its public debut in the largest stock market in the world. In November, China's biggest e-commerce firm Alibaba Group Holding Ltd said it was choosing between US and Hong Kong to list its shares, the report said.
In the interview with Bloomberg, del Alma said, "Some of the sexiness of IPOs in the U.S. may be going away because of some of the perception issues. When you think about it, five years ago technology companies were looking at an IPO in Nasdaq because that's the global technology exchange. Then all of sudden these accounting issues started to come up." Del Alma helps manage exchange traded funds worth $2.8 billion.
Citing the microblog of the US securities regulator, the report said that the decision to ban the affiliates of the accounting companies "ignored" the efforts and progress that China has made on cross-border rules cooperation. The four affiliates, namely, Deloitte Touche Tohmatsu CPA Ltd., PricewaterhouseCoopers Zhong Tian CPAs Ltd., Ernst & Young Hua Ming LLP and KPMG Huazhen, are given 21 days to submit their petition for review with the SEC before the decision made on January 22 will become final, the report said.
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