(Bloomberg) — Chinese stocks traded in the U.S. recouped some losses after the biggest plunge since 2008 on Thursday as investors fretted anew about the potential that regulators could seek their delisting.
New Oriental Education & Technology Group Inc. rose 5.3% while e-commerce platform Pinduoduo Inc. and electric vehicle maker XPeng Inc. each rose more than 2% at 4:36 a.m. New York time in premarket trading.
The Nasdaq Golden Dragon China Index on Thursday slid the most since October 2008 after the U.S. Securities and Exchange Commission identified five Chinese companies that could be subject to delisting if they failed to comply with certain auditing requirements. Hong Kong’s Hang Seng Tech Index fell on Friday, even as the Chinese securities regulator said it will cooperate with the U.S.
“The ADR delisting is not new news” but risks are rising on the domestic, geopolitical, external fronts, Bloomberg Intelligence Strategist Marvin Chen said. “China policy may need to change its tone on tech regulations to at least reduce the domestic regulatory risks for China tech.”
The Golden Dragon index is 68% below its record high in February of last year after China intensified a crackdown on sectors like technology and gaming as part of President Xi Jinping’s campaign for “common prosperity.”
ADR investors “are caught between a rock and a hard place,” said Neil Campling, head of TMT research at Mirabaud Securities. “Until we have clear sight that the policies of restrictions have been completed, or at least there are no more future policies planned, it is difficult to see why new investors would step in.”
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In another blow to tech investors, Didi Global Inc. suspended preparations for its planned Hong Kong listing after failing to appease Chinese regulators’ demands that it overhaul its systems for handling sensitive user data, according to people familiar with the matter. The company’s shares plunged 20% in premarket trading.
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