Chinese shares traded in the US fell on Monday after Chinese shares listed on the Hong Kong Stock Exchange fell 7.2% earlier in the day. It was the biggest descent in over 13 years.
The fall was due to several factors. First, there are fears that China’s close relationship with Russia could backfire on Chinese companies. Russia is reported to have turned to China for military assistance. And US officials said they would take serious action to prevent that from happening. Investors fear this could include sanctions against Chinese companies.
In addition, China is fighting another Covid outbreak by shutting down Shenzhen, an important technology hub; Jilin, northern province; and some residential and office space in Shanghai.
In addition, last week the Securities and Exchange Commission cited five Chinese companies listed on US exchanges for not submitting their audits to regulators. Ultimately, this may lead to the delisting of companies from US exchanges.
Companies include Yum China Holdings (YMC) — Get the report from Yum China Holdings, Inc., the operator of the KFC chain in China, and the biotech company BeiGene (BGNE) – Get the BeiGene Ltd report. According to Morgan Stanley strategists quoted by The Wall Street Journal, the list could grow in the coming weeks.
The regulatory climate in China is also hurting stocks. There, regulators have announced new rules to protect youth. Live broadcasts, online games and audio and video platforms will have to establish a “youth mode” for minors.
Additionally, tech and entertainment titan Tencent, which is not registered in the US but trades through the TCEHY counter, could face a record-breaking fine for violating money laundering laws, according to The Journal.
Among the largest Chinese companies listed in the US, e-commerce company AlibabaWOMAN) – Get the report of Alibaba Group Holding Ltd. fell 7% on Monday and fell 65% last year. Fellow e-commerce giant (JD) – Get JD.com Inc. The report also fell 7% on Monday and lost 48% last year.
Internet technology company NetEase (NTES) – Get NetEase Inc. The report also fell 7% on Monday and has lost 31% over the past 12 months. Artificial Intelligence/Baidu Internet Company (BIDU) – Report by Get Baidu Inc. fell 6% on Monday and has lost 58% over the past year.
And the forecast is not positive in the future. “We don’t see a major catalyst in the near future,” Bloomberg Intelligence strategist Marvin Chen told Bloomberg News.