Topline
Shares of Chinese heavyweights trading in the United States plunged Monday amid growing concerns over Beijing’s ties to Russia and potential delistings, piling on to losses of more than $1.1 trillion since regulatory concerns during the pandemic started battering the formerly high-flying Chinese stock market.
Jack Ma, co-founder and former executive chairman of e-commerce giant Alibaba, speaks in Paris on … [+]
Key Facts
As of 11 a.m. ET, shares of e-commerce juggernaut Alibaba, the largest Chinese company listed in the U.S., were among the hardest hit, falling nearly 9% on the New York Stock Exchange to the lowest level in nearly six years and pushing losses to $611 billion since an all-time price high in October 2020.
Fellow online retailers JD.com and Pinduoduo posted similarly staggering declines, plunging 9% and 7%, respectively, intensifying declines that have wiped out about $282 billion in market value since the firms’ all-time highs last February.
Chinese stocks have “had a rough patch” over the past year amid the nation’s strengthening regulatory campaign against technology companies and, more recently, concerns firms could face removal from U.S. exchanges for potential ties to foreign governments, Oanda analyst Ed Moya said in a Monday email.
On Tuesday, the Securities and Exchange Commission identified five Chinese companies, including fast-food giant Yum China and biotech firm BeiGene, using foreign accounting firms and warned they must hand over audit records or face removal from U.S. exchanges; since then, Yum and BeiGene stocks have plunged nearly 30% apiece.
Beijing’s relationship with the Kremlin is further “complicating investor appetite” for Chinese stocks, Moya says, pointing to weekend reports that Russia asked China for military aid in its war against Ukraine, and cautioning any such coordination could lead to “swift” retaliatory sanctions akin to those that forced the Moscow Stock Exchange to shut down last month.
Other top U.S.-listed Chinese stocks caught in the sell-off include Internet giant Baidu, Tesla rival NIO and gaming company NetEase, which are down 4%, 5% and 6% on Monday.
Surprising Fact
All told, the 10 largest Chinese companies trading in the United States have lost more than $1.1 trillion in market value since all-time highs during the pandemic—representing more than double their combined value of roughly $530 billion on Monday.
Tangent
The Nasdaq Golden Dragon China index, which tracks Chinese businesses trading in the United States, fell as much as 8% Monday and has plummeted 73% from an all-time high in February 2021. The index is at its lowest point in nearly nine years.
Key Background
Chinese stocks trading in the United States have lost massive amounts of value since Beijing officials issued a series of sweeping private sector regulations this summer—in one instance banning the for-profit education business virtually overnight. “Yes, there’s a huge market and lots of growth potential, but obviously there are regulatory risks that seem to be growing larger with every passing month,” Tom Essaye, author of the Sevens Report, wrote in a recent note. The sell-off has also rocked markets in China, with stocks trading in Beijing posting their worst day since the Great Recession on Monday.
Further Reading
Live: Russia And Ukraine Negotiations On ‘Pause’ Until Tuesday, Ukraine Says (Forbes)
U.S.-Listed Chinese Stocks Have Lost Another $150 Billion In Market Value This Week As Beijing Targets ‘Excessive’ Wealth (Forbes)
Source: https://www.forbes.com/sites/jonathanponciano/2022/03/14/chinese-stock-crash-us-losses-top-11-trillion-as-beijings-russia-ties-spark-investor-concerns/