Chinese techs in broad slump as SEC hints at delisting actions

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• Chinese Internet stocks such as JD.com (NASDAQ:JD), Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU) dove into the red, Thursday, as the Securities and Exchange Commission named five companies from China that could be de-listed for failing to abide by U.S. accounting regulations.
• The SEC said YumChina Holdings (NYSE:YUMC), BeiGene (NASDAQ:BGNE), Zai Lab (NASDAQ:ZLAB), ACM Research (NASDAQ:ACMR) and Hutchmed (NASDAQ:HCM) have been cited for not adhering to the Holding Foreign Companies Accountability Act [HFCAA]. That act gives the SEC the power to delist companies and ban a company's shares from being traded if the company fails to allow U.S. regulators to review their company audits for three-straight years.
• It's the first time the SEC has warned companies that their shares are at risk of being delisted for violating the act which went into effect in late 2020. The SEC has given the five companies until March 29 to submit evidence disputing the Commission's charges.
• Reaction to the SEC's moves was swift, and negative across Wall Street. In afternoon trading, YumChina (YUMC) shares fell 15%, BeiGene (BGNE) slumped by 12%, ZLab (ZLAB) plunged more than 17%, ACM (ACMR) fell 25% and Hutchmed (HCM) was down by a relatively mild 8%.
• The SEC's action reverberated across Chinese Internet companies as even those not mentioned by the agency were battered by investors.
• Alibaba (BABA) fell 9%, Baidu (BIDU) gave up 6.6%, Weibo (NASDAQ:WB) was down by 6%, DiDi Global shares dove more than 10%, Tencent Holdings (OTCPK:TCEHY) fell 6% and the KraneShares CSI China Internet ETF (NYSEARCA:KWEB) dropped by more than 9%.
• Even Internet e-commerce retailer JD.com (JD), which reported solid quarterly results, wasn't immune to the Chinese-stock selloff, as its shares fell early, and remained down by almost 18% Thursday afternoon.