Asian equities were mixed as Mainland China and Hong Kong underperformed on delta risks.
Asian equities were mixed as Mainland China and Hong Kong underperformed on delta risks. China has locked down the city of Xiamen, Fujian, which has a population of 4.5 million. China has thus far taken a cautious approach to outbreaks of the delta variant of the coronavirus. This is the latest in a slew of lockdowns that have caused economic activity to slow somewhat. News of developer Evergrande’s restructuring likely also weighed on sentiment. SEC Chairman Gary Gensler published an op-ed in the Wall Street Journal last night on the Holding Foreign Companies Accountable Act (HFCA). The piece is nothing new. He reiterated that companies have three years to allow the PCAOB to inspect their audit books and that the timeline could be reduced to two years if Congress passes the acceleration bill. Unfortunately, it does not mention that the China Securities Regulatory Commission (CSRC) has pledged to “create conditions for audit cooperation with the U.S.” The CSRC release is available here. While the language in the bill and Gensler’s latest statements place the onus on the companies to change their behavior, this issue likely can only be solved through cross-border cooperation between regulators, whose rules the companies follow. Again, nothing new here. I would like to see Gensler reaching out to his counterparts in China to see if a solution can be found.
