Weakness in New York-listed Chinese IT Companies... Impact of US 'Stock Market Delisting Rules'

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[Asia Economy Reporter Ki-min Lee] The U.S. Securities and Exchange Commission (SEC) has enacted regulations allowing the delisting of large Chinese companies listed on the New York Stock Exchange due to accounting issues, causing the stock prices of Chinese tech companies to fall simultaneously, according to Bloomberg and other sources.

According to Bloomberg, Baidu plunged 8.55% on the New York Stock Exchange on the 24th (local time), while Alibaba and Tencent also dropped 3.40% and 5.09%, respectively. On the Hong Kong Stock Exchange, as of 3 p.m. on the 25th, Alibaba fell 3.83% and Tencent declined 2.97%. Baidu's stock price even plummeted more than 10% during the morning session.

Some view this as a result of the U.S. SEC activating the delisting regulations under the 'The Holding Foreign Companies Accountable Act' due to increased Chinese government control over large IT companies.

The Holding Foreign Companies Accountable Act stipulates that companies unable to prove they are not controlled by foreign governments or that fail to pass audits by the Public Company Accounting Oversight Board (PCAOB) for three consecutive years cannot be listed in the U.S. Former President Donald Trump signed this law in December last year.

Although the law applies to all foreign companies, it is effectively targeted at Chinese firms, causing stock price instability among Chinese tech companies listed on the U.S. stock market.

Earlier, Bloomberg reported that the Chinese government proposed that domestic information technology (IT) companies establish joint ventures to manage the vast consumer data collected through online shopping and other means.

Bloomberg stated that this plan, led by the People's Bank of China, the country's central bank, requires major e-commerce and payment platform companies to establish joint ventures supported by the government, representing an attempt to strengthen regulatory control over the internet sector.

This content was produced with the assistance of AI translation services.