Alibaba Shares, Vipshop, Baidu and other Chinese companies fell in the US. Here's what happened

Акции Alibaba, Vipshop, Baidu и других китайских компаний упали в США. Вот что случилось

The US regulator could not check the audit reports of some Chinese companies.

Didn't pass the test

In 2021, the SEC - the US Securities and Exchange Commission - approved a law to hold foreign companies accountable. This law requires U.S.-listed foreign issuers to make detailed financial disclosures.. If the company does not show auditors' reports within three years, her papers will be delisted from the stock exchange.

Five Chinese companies recently filed their annual returns with the SEC.. And the commission failed to cross-check their audit. Here are the companies, and this is how their papers fell on the American stock exchange 10 Martha:

  1. BeiGene (BGNE) — 184 $ (−6%).
  2. Hutchmed (Ho Chi Minh City) — 18 $ (−7%).
  3. Zai Lab (ZLAB) — 36 $ (−9%).
  4. Yum China (YUMC) — 44 $ (−11%).
  5. ACM Research (ACMR) — 64 $ (−22%).

The last two - Yum China and ACM Research - are on the St. Petersburg Exchange. And if companies keep breaking the rules, in 2024-2025, the regulator will delist securities from US exchanges. In this case, investors may lose access to their assets, if they do not have time to sell them in advance.

Others can join

Other companies may join the top five as they report.. That's why the Golden Dragon China Index, which includes US-listed Chinese issuers, 10 March fell on 10%.

"Most likely, all Chinese papers will be on the list, since no company will be able to meet the audit requirements”, - says the provider of Chinese ETF KraneShares.

According to the provider, companies will not be able to follow US law, because China is afraid of a data breach: "Companies held hostage. Unfortunately, it's a political issue. All companies are checked by the "big four", but China does not allow these reports to be shown to the US regulator.”.

Chinese papers from the "people's" index SPB100. Prices 10 Martha

Alibaba (BABA) 92,9 $ (−8%)
Vipshop (VIPS) 7,2 $ (−10%)
Baidu (START) 135,2 $ (−6%)
TAL Education (TAL) 2,4 $ (−17%)
Hello Group (MOMO) 7,6 $ (−5%)
JD.com (JD) 52,5 $ (−16%)
Li Auto (LI) 26 $ (−6%)
JOYY (YY) 37,3 $ (−11%)

92,9 $ (−8%)

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