Damián Vlassich, Research analyst at IOL Investonline, stated that “the poor performance of the company founded by Jack Ma was the consequence of a series of factors. They were a resurgence of the pandemic in China, greater regulatory pressure and fears about a potential delisting of the Asian giant’s companies listed on Wall Street.“.
“To this whole issue, earlier this week, had also been added the uncertainty about the Chinese government’s position on the conflict between Russia and Ukraine. The fall of Chinese companies reached its most critical moment on Monday, after that some US media reported that the Russian government had asked China for military assistance for its war on Ukrainian territory. considering the close relationship of the Chinese authorities with Russia, it generated a lot of uncertainty within the investment community“, he explained.
Vlassich indicated that in this wheel “Stocks rebounded sharply after government officials came out to quell doubts and also promised to boost economic growth and stabilize markets.yes.”
On the wheel, it reached a volume greater than $117 million, which immediately made it the third highest in its history. This is only surpassed by the one it had in the great fall of December 2020, where it exceeded $140 million, and also by the day Alibaba debuted in the North American market, reaching a transaction volume higher than $270 million, he recalled.
The US Securities and Exchange Commission said last week that US-listed securities for five Chinese companies are at risk of delisting, alarming the industry. It was the first time the regulator had named specific actions for failing to comply with the Foreign Company Liability Act. Passed in 2020, the law would allow the SEC to delist Chinese companies from US exchanges if US regulators fail to review the companies’ audits for three consecutive years. Beijing’s concerns about information security have generally prevented Chinese companies from allowing such audits.
“The Chinese government continues to support overseas listings of various types of companies,” said the Chinese-language state media report, translated by CNBC. The article said that regulators should “complete as soon as possible” the crackdown on Internet platform companies.
Hong Kong’s Hang Seng Index rose in Wednesday afternoon trading, after closing Tuesday at fresh lows not seen in more than six years. “Share prices were so low that even if investors wanted to sell, it was not a good time, which has created room for a rally,” First Shanghai Securities analyst Linus Yip was quoted as saying by local daily South China Morning. Post.
Many of the aforementioned securities had collapsed at the wheel after the investment bank JPMorgan Chase recommended not to invest in up to 28 Chinese companies in the digital sector due to Beijing’s regulatory campaign or possible exclusions from the US markets if they do not comply with the audit requirements of the regulators of the North American country.
However, bargain hunting was not the only thing that prompted the listed companies today, but also a meeting of the Committee for Development and Financial Stability of the State Council (the Chinese Executive) to “study the current economic situation and the problems in the capital markets”.
According to the official Xinhua news agency, at this summit the need to maintain “stability” in the markets was pointed out, the government’s support for the IPOs of Chinese companies abroad -which had been in question for months- and It was requested to advance in the campaign to regulate digital platforms “through standardized, transparent and predictable supervision.”
In the past two years, the Chinese government has cracked down on big tech companies for alleged monopolistic practices and real estate developers’ high reliance on debt. Investors began to worry specifically about US-listed Chinese stocks after Beijing clamped down on Didi just days after it was listed in New York in late June.
Source: Ambito
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