Alibaba, Baidu drop as SEC says 'significant issues remain' to resolve audit transparency
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Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), Baidu (NASDAQ:BIDU) and several other Chinese technology stocks dropped on Tuesday after an official with the Securities and Exchange Commission said "significant issues remain" in resolving the lack of transparency on being able to audit Chinese firms.
YJ Fischer, Director, Office of International Affairs, said that the Public Company Accounting Oversight Board, or PCAOB needs access to audit paperwork from Chinese firms and the claim that the audit paperwork cannot be produced because of national security concerns is "questionable at best."
In addition, Fischer noted that although there have been "ongoing and productive discussions" between U.S. and Chinese authorities concerning the audit investigations, time is "quickly running out."
Alibaba (BABA) shares fell more than 6% to $82.07, while JD.com (JD) and Baidu (BIDU) both declined approximately 7.5%.
Other Chinese tech stocks were hit, including NetEase (NTES), iQIYI (IQ), Tencent (OTCPK:TCEHY), Pinduoduo (PDD), Dada Nexus (DADA) and Dingdong (DDL), which all saw declines, including Bilibili (BILI), which declined more than 13%. 
Fischer also said that even if a deal was reached between the U.S. and China, it would only be the start towards achieving the PCAOB mandate and some companies could even delist from U.S. exchanges, as DiDi Global (DIDI) is preparing to do.
In March, the PCAOB said any speculation about deal that would prevent hundreds of Chinese companies from being removed from U.S. exchanges was "premature."
A month later, however, China confirmed there were plans to revise the confidentiality rules on overseas listings in an effort to help Chinese companies avoid being delisted in the U.S. The China Securities Regulatory Commission said that the original rules, established in 2009, had become outdated.
Earlier this month, investment firm J.P. Morgan upgraded Alibaba (BABA) and several other Chinese tech stocks, citing an abatement to the "significant uncertainties facing the sector."