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There are disturbing signs that the US-China trade war may spill over into capital markets. Reports emerged last week that the Trump administration is considering barring listings of Chinese companies on United States stock exchanges. The potential impact could be huge. There are more than 150 Chinese firms listed on American bourses, with a total market capitalisation exceeding US$1 trillion (S$1.4 trillion). Their presence as well as future US listings of companies from China make sense for both investors and the companies themselves. China has legions of dynamic, innovative firms operating in what is the world’s second-largest economy. More than half of the unicorns in the world today – that is, companies valued at over US$1 billion – are from China, as are 129 of the Fortune 500 companies by revenue. The US has the deepest and most liquid equity markets in the world, with a broad, global investor base that can tap the growth opportunities that Chinese companies present. This win-win arrangement would be put at risk by any attempt to bar or restrict investors’ access to these companies.

As of now, the details surrounding the reported proposal by the Trump administration to restrict Chinese listings are murky. It is not clear what form they will take, how broadly they will be applied, by what criteria and over what time period. Meanwhile, a bipartisan Bill is making its way through the US Congress calling for the delisting of Chinese firms that fail to make audits available to US regulators within three years. But that Bill’s successful passage, as well as its final form, is also uncertain.