CNBC’s Jim Cramer said Tuesday that he’s actually disappointed White House trade advisor Peter Navarro called reports claiming that the Trump administration was considering restricting Chinese companies’ access American dollars “fake news.”
“I’ve gotta tell you, that’s actually too bad,” the “Mad Money” host said. “We should make it harder for Chinese companies to raise money here in the United States, and I’m not even talking about this in the context of the trade war. This is purely about protecting investors from garbage merchandise.”
Navarro made his comments Monday on “Squawk Box.” He was responding to media reports that the White House was considering delisting Chinese companies from American stock exchanges, among other measures, as a way to ratchet up pressure in the U.S.-China trade war.
While high-profile figures such as Senate Majority Leader Mitch McConnell think curbing Chinese investment in the U.S. isn’t a great idea, Cramer said changes need to be made.
“What we need is a moratorium on Chinese IPOs,” Cramer said. “Companies from China keep coming public here in the United States, and, for the most part, this deluge of deals has been a nightmare for anyone who has participated in them.”
Plus, given the lackluster performance of many recent IPOs, “the last thing we need is more questionable securities from China, which has much weaker regulations surrounding all of this stuff than we do,” Cramer argued.
Cramer said the vast majority of recently listed Chinese companies have struggled. He said 31 Chinese companies went public in the U.S. in 2018, plus 14 more this year.
On average, the stocks have fallen more than 30% from where their IPOs were priced, Cramer said.
Of the 14 companies that went public in 2019, just four are above their IPO price, Cramer said. Cramer said he isn’t sure how long that will last, pointing to the fact 28 of the 31 companies that listed last year are trading below their IPO price.
“I would sell them all,” he said of the 2019 class of Chinese stocks.
Cramer isn’t the only one pushing for increased regulation on IPOs from Chinese firms. Recently, Reuters reported that Nasdaq is attempting to tighten restrictions and slow down the approval process for small companies from the country.
Additionally, in June, a bipartisan bill was introduced to increase oversight of Chinese and other foreign companies listed on American stock exchanges.
“It makes a ton of sense — if you want to list your stocks on a U.S. exchange, you should have to follow U.S. securities law,” Cramer said. “In fact, it’s total lunacy that this isn’t already the status quo.”
No matter what future actions the Trump administration takes in the trade war, Cramer said he would like to see restrictions on Chinese IPOs “because they are hazardous to your wealth.”
“But even if these Chinese IPOs keep coming, you can avoid getting burned with this one simple trick: just say no,” he said.
