Chinese shares of Alibaba, Baidu, JD.com, Pinduoduo and Weibo listed on US stock exchanges closed correctly in the red on Tuesday evening. One reason is likely to be the economic concerns that spread after the sudden warning. But more importantly, the US Securities and Exchange Commission still sees problems in examining business transactions.
In a statement on the SEC’s website, the SEC’s director of international affairs, YJ Fischer, said difficulties continued to scrutinize Chinese companies’ financial statements. According to Fisher, the Public Company Accounting Oversight Board (PCAOB), which monitors auditors on public contracts, still does not have full access to final audits.
According to the director of the SEC, there are fruitful talks with the Chinese authorities, but time is running out. Because Chinese securities listed on US exchanges could be subject to a trading ban as early as the beginning of 2023. Even if an agreement is reached, this will only be the first step so that the PCAOB can also fulfill its legal mandate in time, according to Fisher.
Currently, Chinese companies are not allowed to share financial documents classified as confidential with foreign authorities for reasons of national security. However, the China Stock Exchange Supervisory Authority announced at the beginning of April that this is no longer up to date and that it plans to adapt relevant regulations.
SEC director statement warning that time is running out hurts shares of Alibaba (-4.8%), Baidu (-6.7%), JD.com (-7.0%), Pinduoduo (-8.6%) and Weibo (-4.6%) put additional pressure Tuesday. The securities of Chinese companies listed on US stock exchanges remain highly volatile. In addition, it is difficult to assess the risks of a trade embargo. Therefore, investors refrain from investing.
Alibaba Group
(WKN: A117ME)
Stock trading in Chinese companies is associated with significant political and legal uncertainties. There is an increased risk of total loss for investors.
