Global index funds seek to shift out of Chinese ADRs as delisting looms

FILE PHOTO: A woman wearing a face mask walks on a pedestrian overpass with an electronic board showing the Shanghai and Shenzhen stock indexes, China, March 13, 2020. REUTERS/Aly Song

Global index-tracking fund managers with exposure to US-listed Chinese firms are pushing index providers to swap into their Hong Kong-traded peers as delisting risks threaten to roil the $37 billion market for China-focused exchange-traded funds (ETFs).

Washington is demanding complete access to the audit papers of these firms, a request so far denied by Beijing. Without a solution, Chinese American Depositary Receipts (ADRs) will be delisted by 2024, potentially bashing ETFs with big ADR exposure.

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