Alibaba first in line for audit checks by US regulator

US regulators will attempt to inspect the Chinese audit files of Alibaba as part of a landmark deal between Beijing and Washington.

$Baidu(BIDU.US)$ , $JD.com(JD.US)$ , $NetEase(NTES.US)$ , $Yum! Brands(YUM.US)$ also among selected companies.

$Alibaba(BABA.US)$ is China’s most valuable overseas-listed company, with a market capitalisation of $249bn on the New York Stock Exchange. $Yum China(YUMC.US)$ , which owns the KFC and Pizza Hut brands in China, is worth $21bn on US markets.

As part of the US-China deal, the auditors’ work on the accounts of Alibaba and Yum China will be inspected by PCAOB officials in Hong Kong in mid-September. China’s securities regulator, the China Securities Regulatory Commission, met the Chinese arms of the Big Four firms in Beijing last week, according to people familiar with the meeting. Officials told the Chinese accountants to hand over their audit files to US regulators in Hong Kong. The inspections will not be carried out in mainland China due to its coronavirus pandemic restrictions.

“It is hard to say whether the inspection is a good thing or not, and we will see how far the vetting goes,” said one Alibaba employee with direct knowledge of the inspection. “We will try our best to stay in the US stock market.”