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China pulling out of U.S. exchanges
By Catholic Online (NEWS CONSORTIUM)
August 14th, 2012
Catholic Online (www.catholic.org)
August 14th, 2012
Catholic Online (www.catholic.org)
A growing number of Chinese companies are reversing course and pulling
out of U.S. exchanges. Focus Media Holding Ltd. announced this week that
its chairman and private equity firms want to buy back its U.S.-traded
shares. According to financial information firm Dealogic, the deal would
value Focus Media at $3.5 billion.
Accusations of improper accounting by some companies and a deadlock between Beijing and Washington over whether U.S. regulators can oversee their China-based auditors are all part of the reason for the withdrawals.
Withdrawing from U.S. companies also gets rid of the cost of complying with American financial reporting rules.
Focus Media "has been seriously undervalued on U.S. stock markets" and being taken private will help to promote its "long-term strategic development," company spokeswoman Lu Jing says.
Formed in 2003, Focus Media operates electronic advertising displays in elevators and grocery stores.
"We haven't considered whether to list the company on Chinese markets but that possibility has not been excluded," Lu said.
U.S.-traded Chinese companies went under the microscope after auditors and others were accused of accounting irregularities. Concerns about company finances have caused share prices to tumble, costing investors several billion dollars.
"Probably all these companies have some questionable accounting, so they may prefer to move out of the U.S., not to come under too much scrutiny," Marc Faber, managing director of Hong Kong fund management company Marc Faber Ltd. says.
Muddy Waters Research accused Focus Media last year of overstating the number of its display panels and questioned acquisitions reported by the company. Focus Media denied the allegations and said independent auditors confirmed the size of its network.
"The markets are far better off if a few deep pocketed investors own Focus Media instead of mutual funds and other public shareholders," Muddy Waters founder Carson Block said in a statement.
The status of Chinese companies in the United States could be complicated by a dispute between U.S. and Chinese regulators over whether American inspectors will be allowed to examine the work of their China-based audit firms.
The U.S. says it wants auditors to hand over documentation on companies that are under investigation but Chinese authorities have barred the release of some information. If a settlement is not reached, the SEC could reject audits by China-based firms, forcing companies to find new auditors.
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.