The United States and China have a good relationship now. This situation creates  expectations that more Chinese companies with stocks trading on the US exchanges will soon move their listings to their home countries. Some political repercussions may happen in the future.

There are too many political risks. In fact, experts say, that is unlikely to subside even after the U.S. presidential election. Meanwhile, Joe Biden is thought to be able to show more diplomacy with regard to China if he defeats President Trump. 

But Biden, on trade and other economic issues, still made the hard line.  As a result, The Chinese Company may see listings in its own country or Hong Kong as a safer move. The administration made by Trump has the more aggressive approach.

It is especially to China on trade and technology issues than the previous administration. This was conveyed by Mark Mahaney, technology stock analyst with RBC Capital Markets. This condition is now always monitored by the participants.

Biden Administration May Not be Much Different

Many analysts read that this reflects more generational shifts among U.S. policymakers and that the Biden administration in general will continue a similar approach. That's why a fund manager handling China is worried about more write downs of Chinese stock listings in the US.

It's not just cheating companies like Luckin Coffe, which has been kicked out of the Nasdaq this year following the disclosure of massive calculation irregularities made. The ongoing trade war and eroding U.S.-China relations have been the reason why the sector is less attractive to Chinese companies.

It is mainly to seek public registration in the United States. This is what Brian Bandsma, portfolio manager, told the Vontobel Quality Growth fund. He did not expect that all Chinese trading companies in the U.S. would leave the Nasdaq or the New York Stock Exchange.

The American market will likely no longer be the default place for Chinese companies to reach capital. The Chinese government eventually also made a good deal to open up their domestic market to foreign investors. Various interesting steps are also carried out.

Cooperation with Hong Kong

In addition, Hong Kong and China are taking great steps to make local listings more attractive. It is especially true for high-tech startups as bandsma says. He noted that Tencent has been a strong performing stock, although its main trade is in Hong Kong.

Therefore, these stocks are also often referred to as "pink sheets". Ant Financial, an Affiliate of Alibaba Jack Ma, also plans to introduce to the public in Hong Kong and Shanghai. Again, their choice is not the US as the analyst predicted. 

Interestingly, this was done even though Alibaba (BABA) already had a successful IPO on the NYSE in 2014. Small companies are experiencing setbacks as well: they tend to have more exposure to the United States economy than overseas markets. 

America is under threat of recession while facing a possible second wave of Covid-19 cases. The country is still struggling to control the ongoing outbreak. Meanwhile, the largest multinational technologies are now starting to benefit from a recovery that is starting to emerge overseas.

Rotation into Small Stocks Will Occur

But this tech rally doesn't seem to last forever. The increase experienced by many businesses in capitalists and big technology has been massive. Therefore, rotation into small capitalists will occur. It was conveyed by Dan Pipitone, co-founder of TradeZero America.

The elections that will happen traditionally are a dynamic catalyst for this. The situation could become clearer this year. It means that, after the election, either the large or small stocks will absolutely have the opportunity to always develop well.