Why investors are turning positive for US-traded Chinese companies

Beijing’s new proposal to allow US-listed companies to use an external auditor eases tensions with Washington, while dual primary listings in Hong Kong provide better trading and liquidity conditions.

Share prices for US-listed Chinese stocks have whipsawed this year, as investors navigate through a spinning regulation cycle that often feels like a roulette wheel. 

Back in February, the Cyberspace Administration of China CAC reiterated that companies handling personal data for more than a million users would need to seek state permission before raising capital overseas. In March, the US Securities and Exchange Commission SEC signaled regulatory retaliation by publishing a provisional list of Chinese companies using a financial auditor not recognised by the Public Company Accounting Oversight Board PCAOB.

But a turning point appears to have emerged. Earlier this month, China Securities...

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