Why Baidu Stock Crashed Today

What happened

Actions of Baidu Inc. (NASDAQ: BIDU) It tumbled today as investors feared the China-based tech giant could receive increased oversight from Chinese regulators, in addition to threats from the United States about possible takedowns of foreign stocks.

Tech stocks fell 13.4% today.

And that

Investors have recently been nervous about Chinese tech stocks for a couple of reasons. First, the US Securities and Exchange Commission (SEC) has threatened to expel foreign companies from US exchanges if they do not adhere to US auditing practices.

Image source: Getty Images.

Under the Foreign Company Liability Act (HFCA), established by the Trump administration, foreign companies could be excluded from US exchanges if they fail to meet US auditing standards for three consecutive years.

The mounting tension between the United States and China has made some investors nervous, and any talk of a possible delisting of the stocks is enough to make investors uneasy.

Making matters worse for Baidu shares is the fact that the Chinese government is beginning to expand its oversight of big tech companies. The government said earlier this week that it could establish a joint venture between Chinese tech companies and the government to monitor user data.

Now what

Investors are likely to expect more volatility from Baidu and other Chinese stocks in the short term. As the Chinese government expands its oversight of local tech companies, and as US regulators grow increasingly skeptical of Chinese auditing practices, investors are sure to abandon at least some of their positions in tech-based stocks. in China right now.

This article represents the opinion of the author, who may disagree with the “official” recommendation position for a premium Motley Fool consulting service. We are variegated! Questioning an investment thesis, even one of our own, helps all of us think critically about investing and make decisions that help us be smarter, happier, and wealthier.

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