On December 14, 2022, the New York Stock Exchange market was in a festive atmosphere. The Federal Reserve raised interest rates by one percentage point.

WASHINGTON — 

The U.S. market regulator said that for the first time, it has obtained all the authority needed to inspect and investigate Chinese companies listed in the U.S., which has played an important role in completing relevant investigations.

The news was released by the US Public Company Accounting Oversight Board (PCAOB) on Thursday (December 15), and Reuters said it marked a victory for US regulators. This should also be good news for Chinese companies such as Alibaba that are at risk of delisting.

The Public Company Accounting Oversight Board of the United States sent staff to conduct an investigation in September this year, and the investigation has now been completed. The survey report is expected to be published next year.

For more than a decade, Beijing has insisted on denying Chinese companies listed in the U.S. to provide U.S. regulators with accounting information needed for company audits, citing security reasons. When U.S.-China relations were normal, Wall Street did not care about this, but today, when relations between the two countries have deteriorated in an all-around way, this kind of "special treatment" for Chinese companies constitutes a political issue involving national security.

In 2020, the U.S. Congress agreed to legislate on this issue. If more than 200 Chinese companies listed in the U.S. fail to comply with U.S. audit requirements and disclose all accounting information, U.S. securities market regulators can remove them.

In August of this year, the Chinese authorities made concessions, allowing US regulators to travel to Hong Kong to conduct audits of Chinese companies listed in the US. To this end, the two parties reached an important agreement, paving the way for the PCAOB to conduct a field investigation.

Reuters quoted Erica Williams, chairwoman of the U.S. Public Company Accounting Oversight Board, as saying, “We are able to carry out a comprehensive and thorough inspection and investigation, weed out potential problems, and order (Chinese) companies to solve problems. For the first time in history."

Art Hogan, chief market strategist at B. Riley Financial, a Los Angeles-based financial advisory services firm, said that would change the perception of Chinese companies because "the threat of them being forced out of the market seems to be has disappeared".

However, this good news did not show up in the broader market trading on Thursday. Although the stocks of Chinese companies once rose during the session, they all gained and lost at the close, and some even fell sharply. Shares in e-commerce giants Alibaba, JD.com and internet giant Baidu all fell between three and five percent. Tencent Music fell 3.5%.

In this regard, some analysts believe that the U.S. regulatory agency has obtained full powers to conduct audits. Although this has removed the communication barrier between the two systems in the United States and China, it also provides more opportunities for the regulatory authorities to discover more problems with Chinese companies. possible. Under the Chinese system, the solution to some problems may be beyond the capabilities of enterprises themselves.

PCAOB staff raised "a number of potential issues" in their inspection report, which is expected to be finalized and released next year, Williams said.

"Today's announcement should not be misinterpreted as a certificate of complete health for businesses in mainland China and Hong Kong," Williams said.

Williams did not specify what was wrong with the companies, saying only that to the audit investigators the companies were not significantly different from others that were under investigation for the first time.