From 1 minute to midnight for US-listed Chinese technology

Watches of Chinese stocks listed in the United States are very large. The big winner could eventually become the Hong Kong Stock Exchange, a major rival of the US Stock Exchange.

The Securities and Exchange Commission said Thursday that it had nominated five companies for not hiring auditors who could be inspected by US regulators.These companies include Chinese companies like Yum China,

YUMC -15.51%

Domestic KFC and Pizza Hut operators, and biotechnology company BeiGene..

BGNE -12.21%

Under the law passed in 2020, US regulators could be delisted if they could not review their audits for the third consecutive year, at the earliest in 2024.

The announcement is not unexpected. The SEC said in December that 273 US-listed foreign companies may not meet the requirements. In New York, rival Pinduoduo lost 17%. These companies aren’t on the list, but it could be just a matter of time. The five companies identified on Thursday may have been initially flagged because they recently submitted their annual report. SEC.

The accounting debate has been boiling for a long time, but it has boiled over the past year due to worsening relations between the United States and China. China considered it too confidential to pass to the United States for national security reasons, especially for consumers. A high-tech company where bread and butter are big data. Therefore, the auditor refused to allow US regulators to show the book.

China’s regulatory authorities said Friday they opposed the politicization of securities regulations, but believe that talks with US regulators are underway and that mutually acceptable arrangements can be reached.

Most of the largest Chinese companies listed in the United States are preparing for this contingency with a new listing in Hong Kong. Electric car maker NIO Inc. has joined the latest list and made its debut in the city on Thursday.

Shares on the Hong Kong Stock Exchange and the clearing house rose 3% on Friday as they are expected to benefit from a potential outflow from the United States. In last week’s note, Goldman Sachs could add about $ 2.6 billion in average daily sales to the city if all shares of a dual-listed Chinese company were transferred to Hong Kong. The new list could add another $ 1.4 billion. That means it can account for about one-fifth of Hong Kong’s sales.

According to Goldman Sachs, there are still more than 200 US-listed Chinese companies, but they are usually small, accounting for only about 30% of the market capitalization of US-listed Chinese stocks. ..

Given that this problem has long been expected, the sale seems overkill, but investors prefer to stay on the sidelines as Russia’s invasion of Ukraine has made the geopolitical situation more dangerous these days. maybe.

In any case, China’s tech stocks haven’t been endorsed for some time due to China’s regulatory risks. Kraneshares CSI China Internet Exchange Traded Funds, which track China’s offshore technology listings, have lost three-quarters of their value since February last year. Year.

For US-listed Chinese companies, this sentence has long been a barrier, but the latest announcement makes it even clearer.

China’s tech stocks, popular with US investors, have fallen amid regulatory crackdowns on tech companies. The WSJ describes some of the new risks investors face when buying stock in companies such as Diddy and Tencent.Photo composition: Michelle Ines Simon

Write to Jackie Wong (

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