U.S.-China audit agreement ‘a major catalyst,’ expert explains

Beijing offered a rare concession Friday, agreeing to allow U.S. accounting regulators to examine the audits of Chinese firms listed on American stock exchanges.

Major Chinese companies such as Alibaba and Baidu may be rewarded in return, as investors “see a re-valuation of” some of the largest tech names, according to KraneShares Chief Investment Officer Brendan Ahern, who manages the KraneShares CSI China Internet ETF (KWEB).

“The agreement is a major catalyst — it’s a major first step,” Ahern said on Yahoo Finance Live (video above). “The securities that we hold within KWEB are at half [price to earnings ratio], half the peg ratio relative to US internet companies. We should see a bit of re-rating there.”

The agreement between the Public Company Accounting Oversight Board (PCAOB) and China Securities Regulatory Commission (CSRC) establishes a framework for PCAOB inspectors to travel to mainland China and Hong Kong to investigate China-based audits of firms listed in…

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This article was written by and originally published on finance.yahoo.com