Pre-sale of shares: Chinese shares on Wall Street is not yet clear

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Investors sighed with relief after regulators in Beijing extended the olive branch to the United States, showing that they could change their policies so Chinese companies could avoid being expelled from Wall Street.

What’s happening: Shares of tech giant Alibaba (BABA) in New York rose nearly 7% on Monday. The e-commerce platforms Pinduoduo (PDD) and JD.com (JD) jumped 16% and 7% respectively.

But the holiday may have been a little premature as negotiators from the U.S. and China continue to work out details, and tensions between the world’s two largest economies are simmering beneath the surface.

“The policy is still evolving and there is still a lot of uncertainty,” Xiaomen Lu of the Eurasia Group consulting firm told me.

Last weekend, China’s Securities Regulatory Commission, the country’s chief securities supervisor, proposed changing a ten-year rule that prohibits Chinese firms from sharing confidential data and financial information with foreign regulators.

Remember: US regulators have long complained that they cannot access the books of Chinese companies. In 2020, the Foreign Accountability Act was signed, giving the Securities and Exchange Commission the power to reject foreign companies from Wall Street if they do not allow U.S. regulators to conduct audits for three consecutive years.

But Beijing, citing national security concerns, opposed revising its policy. It requires companies trading overseas to conduct audits in mainland China, where they cannot be audited by foreign agencies.

The new amendment could finally allow US regulators to sort out these controversial materials. If it helps resolve the dispute, it could ease much of the concern of more than 200 Chinese firms listed in the United States that have suffered from the strikes in the past year.

But it is too early to say for sure. It is unclear whether U.S. regulators will view the potential changes as sufficient. Last week, SEC Chairman Gary Hensler poured cold water on the idea that a deal was inevitable.

“There have been thoughtful, respectful, productive conversations, but I don’t know how it will end,” Hensler said. “It depends on the Chinese authorities, and frankly, for them it can be a difficult choice.”

Another stone, according to Lu, is whether there is a restriction for companies that have access to confidential data about the Chinese government or infrastructure.

“The only accurate information we have so far,” she stressed, is Didi. The trip service was due to begin removal from New York shortly after its initial public offering last year. Beijing has cracked down on the company, saying its app violates privacy laws and poses risks to cybersecurity.

What’s next: Lou said she sees an approximately 70% chance that some sort of deal will be reached this year between Washington and Beijing. But she still believes that at this point some Chinese firms will need to be removed from Wall Street.

She noted that Alibaba is not only an online market, but also a cloud business. If it provides services to state-owned enterprises, Chinese regulators may still want it to keep its accounts private.

Not every day the grandly rich CEO of one of America’s leading companies takes a big share in a completely different business. But that’s exactly what the always unpredictable Elon Musk has done.

Last: on Monday, the head of Tesla (TSLA) showed a 9% stake in Twitter (TWTR), bringing shares of the social networking platform up 27%.

The investment, which at the time of market closure was valued at nearly $ 3.7 billion, makes it the largest shareholder of Twitter.

Musk did not disclose the purpose of the purchase or any plans regarding the company. But this did not stop speculation that led to an unexpected move.

Analysts expect that Musk, who has been a vocal critic of Twitter policy, will be actively pushing for changes in the way the company operates. Last month, he said he was “seriously thinking” about creating a new social networking platform.

“Given that Twitter is a de facto public city square, non-compliance with the principles of freedom of speech fundamentally undermines democracy,” Musk recently wrote. “What to do?”

He also suggested (of course, by tweeting a meme) that he did not support the CEO of Parag Agraval, who recently took office from Jack Dorsey.

“Musk has already said he disagrees with Agraval’s appointment and that he wants some change,” Morningstar analyst Ali Magarabi said in a note to clients.

The first order of business: after his share was revealed, Musk wrote on Twitter a poll asking if Twitter users wanted an edit button.

But some suspect he may have campaigned for even greater change in the campaign. There are speculations that Musk could collaborate with other investor activists or even form a consortium to make Twitter private. The company is worth $ 40 billion. This is the share of Meta’s competitor, whose market value is 637 billion dollars.

Starbucks (SBUX) caused excitement with its decision this week to suspend the share buyback, which was the first big step taken by Howard Schultz after his return to the post of CEO.

Can the world’s largest oil companies be next? This is what the top Democrats in the House of Representatives are hoping for.

House Speaker Carolyn Maloney and MP Roh Khan, chairman of the Environment Subcommittee, want ExxonMobil (XOM), Chevron (CVX), BP (BP) and Shell (RDSA) to abandon share and dividend buyout programs during the war in Ukraine. and put that money to lower the price of gas pumps.

“Fossil fuel companies are taking advantage of the crisis, earning record profits and spending billions of dollars to enrich their executives and investors,” they wrote in a letter Monday.

Lawmakers also called on oil companies to make “significant investments” in solar, wind and other forms of clean energy to address the climate crisis.

Oil companies, which earn at high energy prices, have faced constant calls to use free money to offset the pain of everyday consumers. In the United States and the United Kingdom, there have been calls for a temporary “tax” on their income to help families cover their electricity bills.

Coming soon: This issue is likely to be presented at a hearing in the House of Representatives on Wednesday, where the leaders of BP, Exxon, Chevron and Shell are scheduled to testify.

The ISM Non-Manufacturing Index, which tracks the U.S. service sector, arrives at 10 a.m. ET.

Tomorrow: Investors will check the minutes of the last meeting of the Federal Reserve for how aggressive the central bank may be later this year.

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