June 3 (Lagos) - One of the big risks affecting China based Companies listed on the US stock exchanges is that whether they could become a victim of the trade war between the two Countries.
China is the fast growing Country which is arguably the world leader in AI even ahead of the US and its Companies are producing products at a cheaper price than what is being produced in the US. China is the world leader in electric vehicles, battery tech, facial recognition, surveillance far ahead of US and any other Country. The electric vehicles produced in China cost a fraction on electric vehicles produced in US and EU.
While it is a fact that the growth of China could not have happened without shift of manufacturing from US to China during the past 30 years during the 'globalization' period. Almost all US consumer goods Companies took advantage of cheap labour in China and shifted manufacturing to China in order to lower their production cost and boost their profits.
That led to China becoming a global giant it is today. The Problem now is that China is probably going to be bigger than US and EU very soon and that is beginning to rile politician in those Countries as they realize they are not going to remain the top economy for much longer.
That is where the tariff war comes in, as the US tries to protect itself from losing its position as the top economy of the World. It needs the US Dollar to remain the reserve currency of the world and wants the influence that it had over the past 6-7 decades.
So could de-listing of Chinese Companies be the latest threat and will it work?
America is the land of opportunity and has always rewarded innovation. If Chinese companies are to be de-listed, it would mark a shift away from that philosophy that America is the place for innovation and cutting edge technology. The US financial markets are the most sophisticated in the world and truly a modern wonder.
De-listing Chinese companies from the US markets would signal to the World that USA is closed for business. It would signal the politics can now influence business to such an extent that retail investors can be barred from being part of the China growth story in this instance. The listing of Chinese Companies is the US is a way to allow US retail investors to be a part of China's rise and benefit from it.
Companies like Alibaba, Tencent, Nio Inc, PonyAI are just some of the Companies that are shaping up the future of China and US investors can be a part of that growth because these companies are listed in New York.
Smart investors should look beyond the smoke from politicians and believe the the American philosophy and heritage which should eventually prevail upon rhetoric from Washington.
If Chinese companies do end up getting de-listed, it would be a huge loss for Americans and a watershed moment for financial world and confirm fears that US is now scared of Chinese innovation.