Alibaba, JD.com slump; U.S. gets 'complete access' to Chinese auditors' books
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Chinese tech stocks such as Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) retreated Thursday as U.S. regulators secured what they said was "complete access" to inspect the books of public accounting firms based in mainland China and Hong Kong.
The move was seen as crucial for several Chinese tech companies that have their shares traded on U.S. stock exchanges. New regulations in the U.S. have given the Securities and Exchange Commission the power to de-list the shares of Chinese companies with shares traded in the U.S. if those companies don't allow U.S. inspectors access to auditors reports for three consecutive years.
Erica Williams, chairwoman of the Public Company Accounting Oversight Board [PCAOB], which is responsible to for the inspections, said that gaining access to the Chinese auditors' books was "beginning of our work" and that it is "making plans to resume regular inspections in early 2023."
While Williams was enthusiastic about the PCAOB getting full access to Chinese auditors' reports, she stressed that those bookkeepers, and their companies, are not completely out of the woods with regards to U.S. regulations.
"Todayâs announcement should not be misconstrued in any way as a clean bill of health for firms in mainland China and Hong Kong," Williams said. It is a recognition that, for the first time in history, we are able to perform full and thorough inspections and investigations to root out potential problems and hold firms accountable to fix them.
With the PCAOB's announcement, many Chinese tech stocks dipped into the red as trading progressed.
By the time the closing bell had rung, Alibaba (BABA) shares had fallen more than 5%, and JD.com (JD) had given up more than 3%. Baidu (BIDU) shares gave up 4.6%, Nio (NIO) shed 2%, Pinduoduo (PDD) fell more than 3% and Bilibili (BILI) slumped by more than 9%.
Tencent Holdings (OTCPK:TCEHY), NetEase (NTES) and Kingsoft Cloud Holdings (KC) also ended the day in the red.
The KraneShares CSI China Internet ETF (NYSEARCA:KWEB) gave up more than 3%.
Earlier this week, China lodged another complaint against the U.S. with the World Trade Organization over U.S. regulations about the sale of certain semiconductor technologies to Chinese companies.