US-listed Chinese stocks fall on fears of possible delisting
Chinese stocks listed in the United States saw their worst day of trading since 2008 on Thursday, fueled by fears of possible delisting in US markets, which require companies to submit audit information to US regulators. Vibration was felt in the Chinese markets on Friday, where many stocks registered a sharp decline.
The Securities and Exchange Commission this week named five Chinese companies that could face delisting under a Trump-era law aimed at probing firms with possible ties to foreign governments or the Chinese Communist Party. Companies have three years to comply with the information and make it operational.
Identified companies in The SEC’s list released was fast food operator Yum China Holdings, which runs KFC and Taco Bell in China, and drug developer Beijin.
Following the announcement, the Nasdaq Golden Dragon China Index, which tracks Chinese companies traded on Wall Street, fell more than 10 percent.
Asian markets continued to decline on Friday.
Tech stocks listed in Hong Kong led the decline, with the Hang Seng Tech Index closing the market down 4.28 percent. JD.com and Alibaba also saw heavy losses, falling 15.8 percent and 7.9 percent, respectively.
“The clock is ticking, and some investors have lost patience, and they are leaving this position of uncertainty,” said Bruce Pang, a Hong Kong-based analyst at China Renaissance Securities. He said the threat of removal from the list was raising concerns of ordinary investors over the wider geopolitical repercussions from the war in Ukraine and US-China relations.
US lawmakers passed the Holding Foreign Companies Accountable Act in 2020, saying the new rules would increase transparency and protect investors from fraud. Chinese regulators said this week they were working with their US counterparts and making progress, but they have also complained that the US is politicizing capital market rules and discriminating against Chinese companies. .
Chinese law prohibits the transmission of certain company financial information outside the country, complicating the companies’ ability to comply with US law.
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