A rough week for Chinese stocks continued Friday as concerns surfaced about their potential audits and delisting on U.S. exchanges.
JD.com stock dropped 2.6%, closing at 59.92, on the stock market today. Alibaba fell 1.9% to 112.99, while Baidu fell 2.7% to 146.54.
In addition, Weibo slid 4.8% to 25.38. Pinduoduo tripped 1.6% to 44.24, while Bilibili collapsed 9.2% to 27.53.
Hong Kong's Hang Seng fell 2.5% Friday. The Hang Seng Tech Index, which represents the 30 largest technology companies listed in Hong Kong, dropped 5%.
U.S. Regulators Want To See The Books
The U.S. Public Company Accounting Oversight Board, or PCAOB, seeks to review audits of Chinese companies listed on U.S. stock exchanges. But China officials have balked at the prospect of U.S. regulators opening the books of Sino firms for national security reasons.
But the U.S. Securities and Exchange Commission has threatened to kick Chinese companies off American stock exchanges if audit records are unavailable for inspection three years in a row.
Speculation arose that the PCAOB reached an agreement with the China Securities Regulatory Commission on how to proceed with those reviews. But news reports say word of a pact is premature. Previous reports had indicated positive developments in the U.S.-China negotiations on audit papers.
"While we will continue our work to find practical solutions to address the concerns of Chinese authorities, ultimately, full access to relevant audit documentation is necessary to carry out our mandate on behalf of investors," the PCAOB said in a written statement.
Chinese firms failing to comply with the auditing process ultimately face removal from the New York Stock Exchange and the Nasdaq. China companies traded in the U.S. have a combined market capitalization of hundreds of billions of dollars.
Chinese Stocks Repeatedly Hammered
Now, however, Chinese stocks are trading near multiyear lows. They have been repeatedly hammered for more than a year due to concerns about further regulations, Covid-19 fears and macroeconomic concerns.
Slower consumer spending also has taken a toll. The regulations have targeted specific sectors. This includes e-commerce, financial technology, social media and online education. It has gouged the market caps of Alibaba, JD, Baidu, Pinduoduo and many other Chinese stocks.
The uncertainty has put Chinese stocks on a roller-coaster ride. For example, Chinese stocks last week surged to their best day since 2008 as government officials signaled a regulatory crackdown could end soon.
China also plans to support overseas stock listings and build stability in capital markets, it was reported by state media. The positive comments came a day after China stocks plunged to 21-month lows.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
