Alibaba and Other Chinese Stocks Got Crushed Thursday. Here’s Why.

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Alibaba

(BABA),

Yum China Holdings

(YUMC),

ACM Research

(ACMR),

Baidu

(BIDU), and

Pinduoduo

(PDD) were among the Chinese stocks that got hammered in U.S. trading Thursday after the U.S. Securities and Exchange Commission put forward a list of five companies that could be delisted if they don’t measure up to U.S. accounting standards.

The list was a first step in applying the Holding Foreign Companies Accountable Act, which became law on Dec. 18, 2020. The act requires foreign companies to make documents available for accounting purposes and delist them if they can’t meet the requirements. The preliminary list of five companies includes

BeiGene

(BGNE),

Zai Lab

(ZLAB),

Hutchmed (China)

(HCM), Yum China, and ACM.

Not surprisingly, BeiGene declined 5.9%, Hutchmed fell 6.5%, Zai Lab dropped 9%, Yum China slumped 11%, and ACM tumbled 22%.

But Chinese ADRs that weren’t named also fell, including Alibaba, which dropped 7.9%, Baidu, which declined 6.3%,

Nio

(NIO), which slumped 12%, and Pinduoduo, which tumbled 17%.

Barron’s warned that Chinese stocks listed in the U.S. could face delisting over accounting issues in July 2021.

Write to Ben Levisohn at [email protected]