Popular Chinese tech stocks tumbled after the US regulator named five Chinese companies that could be removed from US stock markets for failing to meet audit requirements.
Names cited by the U.S. Securities and Exchange Commission on Thursday are fast food company Yum China Holdings, technology company ACM Research, biotechnology group BeiGene, Zai Lab, as well as pharmaceutical company Hutchmed. .
But shares of big tech companies have also fallen as investors are concerned that more companies could be added to the US regulator’s list.
Alibaba dropped more than 5% on Friday (11) in Hong Kong. Its US-listed stocks closed down 7.9% on Thursday.
JD.com plunged 11% in Hong Kong after closing 16% lower on Wall Street. Baidu is down nearly 5% after a 6.3% drop in the United States.
Other dual-listed companies in the US and Hong Kong also dropped sharply.
The wide-ranging losses came as Chinese companies face intense regulatory pressure both at home and in the US. So far this week, the SEC has singled out five Chinese companies for failing to adhere to the Holding Foreign Companies Accountability Act (HFCAA).
That law gives the SEC the power to kick companies off Wall Street if they don’t allow US watchdogs to inspect their financial audits for three consecutive years.
While it applies to any foreign company, the focus on China is obvious. Beijing has always withstood this scrutiny in the past.
It requires foreign-traded companies to keep their audit documents in mainland China, where they cannot be scrutinized by foreign agencies.
The companies cited by the SEC on Thursday are the first of about 270 Chinese companies that could be delisted from the New York Stock Exchange or Nasdaq for failing to comply with the law.
According to analysts at Citi in a research report on Friday, there are “concerns that more companies will be placed on the list.” [dos EUA] In the next months”.
On Friday, the China Securities Regulatory Commission responded to the US move and said it was confident it would reach an agreement with its US counterparts on securities oversight.
Negotiations between the CSRC, the Chinese Ministry of Finance and the U.S. Public Enterprise Accounting Oversight Board have made “positive progress,” the CSRC said in a statement.
The SEC’s move triggered a sell-off in Chinese equities in the United States on Thursday.
The Nasdaq Golden Dragon China Index, a popular index that tracks more than 90 Chinese companies traded in the United States, dropped 10% on Thursday, the worst one-day drop since October 2008.
Yum China, which owns the KFC and Taco Bell brands in China, dropped 11% on Wall Street. ACM Research is down 22%. Zai Lab, Hutchmed and BeiGene are down 9%, 6.5% and 6% respectively
On Friday in Hong Kong, Yum China lost 6%, while BeiGene lost 5%.
The city’s benchmark Hang Seng index tumbled 1.6% on Friday, mainly on investors’ concerns over a protracted war in Ukraine after Ukraine-Russia peace talks stalled.
Japan’s Nikkei 225 is down 2.1%, and Korea’s Kospi is down 0.7%. But China’s Shanghai Composite reversed earlier losses and ended up 0.4%.
US stock futures also fell, with Dow futures down 50 points, or 0.2%. S&P 500 and Nasdaq futures were down 0.1% and 0.2%, respectively.
Source: CNN Brasil
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