Looking at it from the other side (the SEC side) what of the risk that the SEC wanting open books of these Chinese companies? While there is no "real" incentive for China to ban VIE structures in most companies, there is now a real risk of SEC delisting these companies because they fail to jump through the necessary hoops. And it is in the CCPs best interest that the companies DON'T jump through these hoops (because that would mean sharing intel).
You point out an important issue here. Mainstream media often makes little effort to distinguish between these two separate issues. The risk of de-listing in the US is real, and depending on the political situation in the US, could run into higher risk of materializing over the coming years. This is one of the reasons we prefer to be invested in HK-listed shares instead (HK-listed are still VIEs, but a stable listing environment unlike the US)
I agree with the overall view on VIE structure will continue to exist, probably not in a form that's too different from before. But have a different take re: CSRC press release on December 24th. Another way one can interpret that is CSRC doesn't want to make any definite comment or involved in the VIE structure approval so they deferred the VIE permission to other agencies.
Great article Value Punks. I really enjoyed this.
Looking at it from the other side (the SEC side) what of the risk that the SEC wanting open books of these Chinese companies? While there is no "real" incentive for China to ban VIE structures in most companies, there is now a real risk of SEC delisting these companies because they fail to jump through the necessary hoops. And it is in the CCPs best interest that the companies DON'T jump through these hoops (because that would mean sharing intel).
You point out an important issue here. Mainstream media often makes little effort to distinguish between these two separate issues. The risk of de-listing in the US is real, and depending on the political situation in the US, could run into higher risk of materializing over the coming years. This is one of the reasons we prefer to be invested in HK-listed shares instead (HK-listed are still VIEs, but a stable listing environment unlike the US)
I agree with the overall view on VIE structure will continue to exist, probably not in a form that's too different from before. But have a different take re: CSRC press release on December 24th. Another way one can interpret that is CSRC doesn't want to make any definite comment or involved in the VIE structure approval so they deferred the VIE permission to other agencies.
That's fair and yes perhaps need to be mindful about assigning too much weight to the statement from CSRC alone.