A trader works on the floor of the New York Stock Exchange (NYSE) after the opening bell of the trading session in New York, USA, March 13, 2020.
Lucas Jackson | Reuters
GUANGZHOU, China – Top publicly traded Chinese tech stocks listed in Hong Kong were hit Thursday amid fears that some companies could be delisted in the US.
Hong Kong shares of US-listed Chinese tech stocks fell sharply. Alibaba was down more than 4% at 1:04 PM Hong Kong time, Baidu plunged more than 8%, JD.com was down more than 4% and NetEase was almost 3% lower.
It comes a day after the U.S. Securities and Exchange Commission (SEC) adopted a law called the Foreign Company Liability Act, which was passed by the administration of former President Donald Trump.
Certain companies identified by the SEC will require an audit by a US watchdog.These companies will need to submit certain documents to establish that they are not owned or controlled by a government entity in a foreign jurisdiction.
Chinese companies will have to appoint each board member who is an official of the Chinese Communist Party, the SEC said Wednesday.
The US regulator could stop trading in securities that violate its rules.
Not only are Chinese tech companies under pressure from the overseas delisting threat, they are also concerned about stricter regulations at home. Beijing has sought to tame the power of the tech giants and set new rules in areas ranging from financial technology to e-commerce.
While the Chinese government’s crackdown began with the rule of billionaire Jack Ma, including the suspension of Ant Group’s mega IPO, there are signs that Beijing’s targets could extend beyond Ant.
Reuters reported this week that Tencent founder Pony Ma met with Chinese antitrust officials this month. Tencent is only listed in Hong Kong and its shares were more than 2% lower around 1:17 p.m. Hong Kong time.