(Yicai Global) Dec. 6 -- The recent clampdown by some US political forces on US-listed Chinese companies to force them to cease trading harms the interests of all parties involved and does not benefit anyone, a spokesperson from the China Securities Regulatory Commission said yesterday.

The Holding Foreign Companies Accountable Act passed by the Trump administration last year requires all foreign firms listed on US bourses to, among other things, meet the Public Company Accounting Oversight Board’s audit requirements. This would contravene China’s own data security regulations and is prompting sell-offs of those stocks already gone public and deterring many from choosing the US as an overseas listing destination.

The move is not only contrary to the basic principles of the market economy and the rule of law, it also damages the interests of global investors and the status of the US as an international capital market, the spokesperson said at a recent frank exchange with the US Securities and Exchange Commission and the Public Company Accounting Oversight Board.

Better cooperation on audit supervision is important amid a highly globalized capital market, but it needs to be done in a practical, rational and professional way, he said. The CSRC will keep the door open for discussions and continue to strive to resolve this problem with US regulators as soon as possible.

"There is likely to be a huge shift in the structure of investors in Chinese US-listed stocks, with possible permanent exit of some US funds," said Hong Hao, head of research at BOCOM International Holdings. The selling pressure will only be short term because this is induced by regulatory changes, not performance issues, he added.

The Hong Kong bourse, meanwhile, is taking full advantage of the gap in the market and is streamlining its listing process to make it easier for overseas issuers, and in particular those from the mainland, to go public in the special administrative region. A number of Chinese firms, including internet giant Baidu and video streamer Bilibili, have chosen Hong Kong for their secondary listings.

Secondary listings in Hong Kong are more flexible and convenient, Pang Ming, chief economist at Huaxing Securities Hong Kong, told Yicai Global. And listings by Chinese firms in foreign bourses can bring higher levels of attention, liquidity, turnover and valuation in the long run, he added.

Editors: Xu Wei, Kim Taylor