US-Listed Chinese Shares in Bloodbath Following SEC's Delist Threat

BEIJING, March 10 (TMTPOST)— The U.S.-listed shares of Chinese companies saw their worst single-day performance since the global financial crisis more than a decade ago.

The Nasdaq Golden Dragon China Index, which tracks China-exposed firms listed in the United States, crashed about 10% on Thursday, marking the biggest one-day loss since October, 2018. Among stocks of Chinese tech giants, American depositary receipts (ADRs) of Pinduoduo and JD.com settled more than 17% and 15% lower respectively, Alibaba’s shares tumbled nearly 7% and Baidu down over 6%. ADRs of three emerging electric vehicle (EV) makers NIO, Xpeng and Li Auto slumped at least about 6%.

Chinese stocks’ bloodbath came after the U.S. regulator’s delisting threat. The U.S. Securities and Exchange Commission (SEC) has recently ADRs of five Chinese issuers—Yum China, the operator of popular fast-food restaurant chains KFC, Pizza Hut and Taco Bell’ subsidiary in China, the semiconductor process equipment manufacturer ACM Research and three biopharmaceutical companies BeiGene, Zai Lab and HUTCHMED to its provisional list under the Holding Foreign Companies Accountable Act (HFCAA). This is the first time for SEC to identify Chinese stocks’ failure to comply with the law since it went into effect in December, 2020, which could lead to delisting from U.S. stock exchanges. Among other things, the law allows SEC to prohibit stocks of foreign companies listed in the United States from being traded and be delisted from exchanges if the Public Company Accounting Oversight Board, SEC’s accounting body, is unable to inspect or investigate these issuers’ company audits for three consecutive years.

Late Thursday, an official at China Securities Regulatory Commission (CSRC) commented that the top regulator of securities industry in China was aware of SEC’s recent action, which is a normal step to implement HFCAA and relevant rules. “We respect overseas regulator’s effort to improve listed companies financial disclosure and reinforce regulation on accounting firms, but firmly oppose any wrongdoings that politicize regulation on the securities sector, ” the official said, ”We always adhere to an open and cooperative spirit, and would willingly address problems resulted from the U.S. regulator’s inspection and investigation on accounting firms, which is in accordance with the international common practice.”

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