Anti China rhetoric and listing decision hits market

The China rhetoric in Washington is getting more hostile with the US President Trump shooting his first direct attack at China’s Xi Jinping but there is also broader frustration in the financial markets over the lack of transparency from Chinese firms listed on US stock exchanges. The increasingly bellicose tone is weighing on the FTSE and on European indexes, crushing some small shoots of post-corona recovery.

Senate bill could spell end of major Chinese listings on US exchanges

A recent scandal involving Luckin Coffee, China’s version of Starbucks, which fabricated millions worth of sales last year, provided US legislators with the impetus to tighten regulation of foreign companies listing in the US which, although it doesn’t specifically say so, is targeting Chinese firms. The legislation could lead to Chinese tech giants like Alibaba and Baidu being barred from listing on US exchanges and scupper a series of planned IPOs by Chinese companies. For the moment Beijing is not reacting, holding back until the presidential election in November.

In London, Premier Inn-owner Whitbread slumped over 12% after it announced plans to raise £1bn in a rights issue to shore up finances to help it through the corona crisis. Although the firm revealed ambitious plans to go on a post-corona shopping spree investors were less impressed, concerned that the recovery could take much longer than expected.

Small shoots of recovery

The airline sector and support companies like Melrose Industries and Rolls Royce are slowly beginning to dig themselves out of the corona-induced slump and although they have a long way to go before returning to price levels before March, each day brings some positive news. Budget airline easyJet, which has grounded all of its planes during the worst of the crisis, now plans to restart flights between UK and France in June. Further routes will be added as various European countries ease their lockdown measures.