In a politically charged move that occurred after Luckin Coffee was investigated for fraud; the U.S. Senate passed the Holding Foreign Companies Accountable Act (HFCAA). This could lead to delistings of Chinese companies on U.S. exchanges that do not comply with the U.S. government’s stringent regulatory and audit requirements. This might also prevent Chinese companies from listing shares on US exchanges or raising money from US investors. Most notably companies are required to:

1. Disclose information on whether they are owned or controlled by a foreign government.
2. Agree to be audited by the Public Company Accounting Oversight Board (PCAOB) for three years in a row.

This will be problematic for the U.S. listed Chinese companies as the China Securities Regulatory Commission does not allow foreign entities to audit the documents of these companies, citing national security concerns and laws. According to a report compiled by U.S. investment bank Jefferies, this hostile regulatory environment could see about 31 Chinese...