Investment bank says Hong Kong stock market will lure up to 31 Chinese companies listed on U.S. exchanges

It could be taken as another sign of the growing divide between the world's two largest economies.

According to CNBC, the investment bank Jeffries has suggested that 31 Chinese companies listed in the United States may get listed on the Hong Kong stock exchange.

This is due to a new rule that allows companies listed overseas to be included in the benchmark Hang Seng index.

Jeffries is based in the U.S. and has a large presence in Hong Kong.

It stated that the rule change could result in US$557 billion worth of market capitalization being listed in Hong Kong.

It came after the U.S. Senate passed a law in May forcing companies to prove that they are not controlled by a foreign government if they want to be listed on American exchanges.

That bill was sponsored by Louisiana senator John Kennedy, one of the most outspoken anti-China hawks in the Republican party.

U.S. tightens rules around Confucius Institutes

The crackdown on foreign-owned companies isn't the only U.S. law targeting China.

Last week, the Senate passed the Confucius Act, another Kennedy-sponsored piece of legislation.

This act grants universities "full managerial authority" over Confucius Institutes that they host—and allows the U.S. government to revoke funding to those postsecondary schools that don't comply with other requirements.

Kennedy has alleged that Confucius Institutes "can threaten universities by withholding funding in order to achieve their objectives, such as regulating speech the Chinese government opposes".

"Universities forced to choose between losing funding or upholding free speech are often tempted to yield to an institution funded by a foreign government over the interests of free speech," Kennedy claimed on his website. "This allows foreign governments like China’s Communist Party to exert influence (such as prohibiting the Dalai Lama from speaking on a campus) and even apply Chinese Communist laws on U.S. soil."

In 2004, Confucius Institutes were launched by the Office of Chinese Language Council International ostensibly to promote Chinese language and culture.

According to the Confucius Institute website, there are two of these branches in British Columbia. One is hosted by the Coquitlam school district and the other is at the B.C. Institute of Technology.