The Nuclear Option for Chinese Stocks

    Implications of the Equitable Act for American Investors

    As a new “silicon curtain” crashes down between the technological infrastructure of America and some of its allies and China and the countries in its sphere of influence, there has begun to be talk about restricting flows of capital as well as goods between the two nations. Some have fretted that China might dump its holdings of US treasuries in retaliation for escalating tariffs. Other analysts have speculated that U.S. financial institutions might soon be prohibited from investing in securities in mainland China’s state-owned enterprises. And now Senator Marco Rubio has put the nuclear option on the table with a bill and editorial in the Wall Street Journal, “You Can’t Trust a Chinese Audit,” proposing to potentially boot hundreds of Chinese companies off of U.S. stock markets.

    In SEC Audits, Audit & Assurance Services, Investing in China

    China's Greatest Challenge

    Fraser Howie on How Slowing Growth, Rising Debt Levels, and Global Skepticism Will Define China's Next Chapter

    Fraser Howie is one of the most astute observers of China’s banking and financial systems, and his book Red Capitalism: The Fragile Foundations of China’s Extraordinary Rise is required reading for anyone who wants to understand China’s transformation from an impoverished backwater into a powerhouse of authoritarian capitalism. Fraser has spent over two decades trading, analyzing, and writing about Asian stock markets and has worked for companies including Bankers Trust, Morgan Stanley, CICC, and CLSA. He is a regular commentator on Asian financial markets and monetary policy for international print and television outlets.

    MarcumBP’s Drew Bernstein caught up with Fraser recently to understand his views on how the economic and business environment is changing and the challenges that Chinese policymakers face.

    In Investing in China, China Economy

    The Great Short Debate

    Joshua Mitts and Carson Block Square Off at Fraud Conference

    After months of sparring on twitter, the two opponents were to face off at a recent conference on Fraud in the Bull Market organized by the Berkeley Center for Law and Business. Is activist short selling the best hope for cleansing the stock market of bad actors? Or is a plague of shadowy short-report gunslingers destroying worthy companies and fleecing retail investors?

    In short sellers

    Bloomberg Invest Asia 2019: Takeaways Relevant to Pre-IPO Chinese Companies

     I thought it would be useful to share key takeaways from the recent Bloomberg Invest Asia conference, an invitation only event for international business leaders to exchange ideas regarding China’s role in the investment community.  

    In Investing in China, China Economy

    One Billion Customers, One Million Obstacles

    James McGregor on the Changing Business Environment for Multinationals Doing Business in China

    Drew Bernstein interviews long-time China expert James McGregor, the author of One Billion Customers - Lessons from the Frontlines of Doing Business in China, on the challenges that multinationals face doing business in China today and the state of U.S.-China trade relations. Currently the Chairman of APCO Worldwide, Greater China, McGregor has spent three decades in the region as a journalist, venture investor, author, and now public affairs consultant to major corporations with operations in China.

    In Cross Border M&A, China Joint Ventures, China Economy

    From Copycats to Tigers: Why Chinese Tech Companies Can’t Be Ignored

    How Chinese Innovation Will Transform Tech Landscape

    Judging from the headlines, you might think Chinese technology companies are on the ropes. The Justice Department has been investigating and indicting telecom giants Huawei and ZTE. Rising U.S. tariffs threaten to displace China’s dominance in the global supply chain for electronics. And Chinese internet Goliaths Alibaba Group (NYSE:BABA) and Tencent saw their market values shaved in 2018 by investor jitters over government policies and a softening economy.

    In Cross Border M&A, Investing in China, China Economy, IPOs

    Why I Am Still Optimistic About Doing Business in China

    If you only read the newspaper or watched TV, one might think that the economic relationship between China and America was on the verge of an irreparable split. But as I shared in a recent interview on Bloomberg television, I actually remain fairly optimistic that, despite the many bumps in the road, the world’s two biggest economies will continue to find ways to work together and that deals will get done.

    In China Financial Due Diligence, China Economy, IPOs

    5 Keys to Survive as a Chinese CFO

    Or How to Be a Stock Market Success Without Losing Your Sanity

    The role of a Chief Financial Officer for a Chinese company listed on the U.S. stock market is intensely challenging. While the job of CFO generally has become increasingly complex due to the growth in regulatory oversight and the pressure from institutional shareholders, Chinese CFOs need to also bridge two very different business and legal cultures.

    In SEC Audits, IPOs

    China IPOs Have Banner Year in America

    While China's domestic IPO market languishes and uncertainty looms for 2019

    Tencent Music’s (NYSE:TME) $1.1 billion IPO on the NYSE last week put a shiny bow on a banner year for Chinese IPOs on U.S. stock markets, with over $8 billion raised year-to-date, twice the IPO haul for Chinese companies in 2017. With 30 Chinese companies having listed on NASDAQ or NYSE it’s the best year since 2014, when Alibaba’s (NYSE:BABA) $25 billion IPO broke all previous records. What’s more, there is a sizable pipeline of China “unicorns” with multi-billion dollar private valuations hoping to score listings in the near future.

    Given the deteriorating trade relations between China and the U.S., why are so many of China’s most innovative and valuable private companies still seeking to ring the opening bell in New York? And can this blistering pace of new IPOs be sustained?

    In SEC Audits, Advisory, Audit & Assurance Services, IPOs

    Baruch Lev: Accounting Doesn't Add Up

    Why Company Financial Reports No Longer Move Markets

    NYU accounting and finance professor Baruch Lev is one of the most incisive contrarian critics of current accounting practices. In his recent book, The End of Accounting (written with Feng Gu) and his blog, Lev argues that current accounting methods have become hopelessly out of step with how value is created in the modern economy, and that an accumulation of new accounting regulations have only made things worse. Professor Lev backs up his critique with reams of market data and regression analyses to demonstrate how flawed accounting measurements have caused earnings and book value to become nearly meaningless to investors and now create very serious managerial biases and errors in how capital is allocated.

    MarcumBP’s Drew Bernstein met with him to understand his views on where the principles of accounting went awry and how the structure of accounting might be reformed.

    In SEC Audits, Audit & Assurance Services