According to the Associated Press (AP), Chinese companies are withdrawing from the US stock market amid accusations of improper accounting by some companies, as well as complaints that low share prices do not reflect the true value of Chinese companies. On top of this, the AP note that a state bank has provided $1 billion in loan to help companies with listings abroad move them to China’s domestic market exchanges.

Questions:

1. Research and summarize the conflict about improper accounting by some companies and the deadlock that has emerged between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors.

2. Economic commentator Charles Hugh Smith said,”Credibility is like a sand castle; every false promise, every half-truth, every simulacra “solution,” every secret deal, every surrender to vested interests, every politically expedient but ultimately disastrous “fix” removes a handful of sand from beneath the sand castle.” Research this quote. What is he referring to? Comment on whether you believe the situation is as dire as Mr. Smith indicates.

3.What role are private equity firms taking in the withdrawal of Chinese companies from U.S. stock exchanges?

Sources:

Hoft, J. (2012). Chinese Companies Pull Out of US Stock Market Amid Complaints Over Price, Gateway Pundit, August 14 (Retrievable online at http://www.thegatewaypundit.com/2012/08/chinese-companies-pull-out-of-us-stock-market-amid-complaints-over-price/)

McDonald, J. (2012). Chinese Companies Pull Out of U.S. Stock Markets, USA Today, Aug. 14 (Retrievable online at http://www.usatoday.com/money/world/story/2012-08-14/China-US-stock-markets/57048488/1)

One News Page video. (2012). Europe Debt Crisis, China Economy, Market Strategy, August 14 (Retrievable online at http://www.clipsyndicate.com/video/playlist/8178/3701045?wpid=8989)