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Kudlow: Nobody Can Confidently Invest in Chinese Companies


By    |   Tuesday, 19 May 2020 10:21 AM

President Donald Trump’s economic adviser Larry Kudlow said nobody can invest confidently in Chinese companies and that the U.S. needs to protect investors from the country’s lack of transparency and accountability.

“We have learned that Chinese companies are not transparent,” Kudlow said Tuesday on Fox Business Network. “They do not meet the norms, the regulations,” the veteran financial guru and former Ronald Reagan adviser said.

Kudlow pointed to potential lawsuits related to the coronavirus, saying “until that stuff is sorted out, nobody really can invest with confidence in China.”

Kudlow’s comments came as the Trump administration is increasingly blaming China for the coronavirus pandemic. Trump’s critics have accused him of targeting China to deflect attention from his administration’s handling of the U.S. outbreak.

The number of Americans infected by the virus has surpassed 1.5 million and there have been at least 90,000 deaths, according to data compiled by Bloomberg.

Kudlow spoke in the wake of a Reuters report that Nasdaq Inc. (NDAQ) is set to unveil new restrictions on initial public offerings (IPOs), a move that will make it harder for some Chinese companies to debut on its stock exchange.

While Nasdaq will not cite Chinese companies specifically in the changes, the move is being driven largely by concerns about some of the Chinese IPO hopefuls’ lack of accounting transparency and close ties to powerful insiders, people familiar with the matter told Reuters.

At a time of escalating tensions between the United States and China over trade, technology and the spread of the novel coronavirus, Nasdaq’s new curbs on Chinese IPOs represent the latest flashpoint in the financial relationship between the world’s two largest economies.

The latest flare-up has reignited concerns that China could weaponize its holdings and flood the markets with U.S. bonds. Beijing is the second-largest owner of U.S. government debt, holding $1.08 trillion worth of treasuries, Bloomberg said.

However, Kudlow said he does not believe China will sell U.S. debt, despite escalating tensions between the world's two largest economies over the novel coronavirus outbreak.

"I don’t believe they’ll sell our debt, because those are the crown jewels of their foreign exchange reserves," said Kudlow, who worked as Reagan’s budget deputy between 1981 and 1985.

"And of course they would lose even more money by doing that. It’s like catching a falling knife," said Kudlow, who served as the Trump campaign's senior economic adviser.

Meanwhile, foreign holdings of Treasuries slumped in March by the most this century as pandemic-related global market turmoil sent U.S. debt yields plunging to record lows and volatility surged, Bloomberg said.

Total foreign ownership of Treasuries dropped $256.6 billion to $6.81 trillion, according to a report from the U.S. government released Friday. That’s the biggest drop in data stretching back to early 2000.

Material from Bloomberg and Reuters has been used in this report.

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President Donald Trump's economic adviser Larry Kudlow said nobody can invest confidently in Chinese companies and that the U.S. needs to protect investors from the country's lack of transparency and accountability.
kudlow, invest, chinese, companies
Tuesday, 19 May 2020 10:21 AM
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