November 30, 2022

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Alibaba and other popular Chinese technology stocks fell

(CNN Business) –– Popular Chinese tech stocks plummeted after a US regulator named five Chinese companies listed off the country’s stock exchanges for failing to meet audit requirements.

The names cited by the US Securities and Exchange Commission (SEC) on Thursday include fast food company Yum China Holdings, technology company ACM Research, biotechnology group BeiGene, Zai Laboratories and Hutchmed pharmaceutical companies.

However, shares of Chinese technology companies also fell as investors worried that more companies would join the SEC list.

Alibaba fell more than 5% this Friday in Hong Kong. Its shares listed in the US ended 7.9% lower on Thursday.

After closing 16% on Wall Street, JD.com fell 11% in Hong Kong. Baidu fell nearly 5% following a 6.3% decline in the United States.

Other double-listed companies in the US and Hong Kong also fell sharply.

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These comprehensive losses come as Chinese companies face intense regulatory pressure both domestically and in the United States. So far this week, the SEC has signaled. Five companies Chinese For non-compliance with the law of liability of foreign companies (HFCAA). That rule gives the SEC the power to expel companies from Wall Street, and they do not allow US oversight committees to review their financial audits for three consecutive years.

Although this applies to any foreign company, the focus is on China This is the reality itself. Beijing has often opposed such studies in the past. Foreign-listed companies must keep their audit documents in the mainland of China, where they cannot be inspected by foreign companies.

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The companies cited by the SEC on Thursday were the first of about 270 Chinese companies to be removed from the New York Stock Exchange or NASDAQ for failing to comply with the law. As City researchers noted in a research report on Friday, “there are concerns that more companies will be listed. [de EE.UU.] In the coming months. “

This Friday, China’s Securities Regulatory Commission (CSRC, in English) responded to the US move, saying it was confident of reaching an agreement with its U.S. counterparts on securities monitoring. Negotiations between the CSRC, China’s Ministry of Finance and the US Board of Public Accounts Oversight Board have made “positive progress”, the company said in a statement.

SEC action spurred sell-off in Chinese stocks in the US on Thursday.

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The Nasdaq Golden Dragon China Index, a popular index that tracks more than 90 Chinese companies listed in the United States, fell 10% on Thursday. This marks its worst daily fall since October 2008.

Yum China, which owns the KFC and Taco Bell brands in China, fell 11% on Wall Street. ACM research fell 22%. For their part, Zai Lab (ZLAB), Hutchmed and BeiGene (BGNE) fell 9%, 6.5% and 6% respectively.

In Hong Kong this Friday, Yum China lost 6% and BeiGene lost 5%.

The city’s main index, Hang Seng, fell 1.6% on Friday on concerns over a protracted war in Ukraine following the stalemate in peace talks with Russia. Japan’s Nikkei 225 fell 2.1% and Korea’s Kospi 0.7%. But China’s Shanghai Composite ended 0.4%, replacing previous losses.

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U.S. stock futures also moved lower, with the Dow futures down 50 points or 0.2%. The futures of the S&P 500 and Nasdaq are down 0.1% and 0.2%, respectively.