Some market strategists were less pessimistic, however, saying cooler heads would likely prevail in the accounting dispute, achieving a compromise to prevent undermining financial links.
Uwe Parpart, chief strategist at Reorient Financial Markets in Hong Kong, said he was unaware of accounting irregularities at any of China’s larger companies with ADRs.
Such accounting irregularities have been a problem at of some smaller Nasdaq-listed China companies, Papart said, although he warned that the scale of such abuses had been somewhat sensationalized.
“Some of the U.S. short-sellers have vastly exaggerated the extent of the problem, although it would be foolish to deny that there’s a problem,” Parpart said.