It has been an unprecedented few days for Chinese technology stocks.
It began at the end of last week, when the US Securities and Exchange Commission named five Chinese companies listed in New York for a possible delisting over audit-related concerns.
The result? Shares of Mainland technology majors tumbled in Hong Kong and the US, as many of the firms are dual listed on both markets.
The meltdown has only continued this week. Hong Kong’s Hang Seng Index lost 5.72% on Tuesday alone, putting its losses over the past five trading days at nearly 12%. The Hang Seng Tech Index tumbled about 11% on Monday, and followed up with another 8% fall on Tuesday.
In the US, the Nasdaq Golden Dragon China Index — which tracks the stock of firms listed in New York but doing the majority of their business in Mainland China — closed 11.73% down on Monday, and has fallen by a whopping 24% in the past five-day trading period.
These are extraordinary numbers — but the trigger for the meltdown is equally extraordinary. The SEC said that five firms — BeiGene, HutchMed (China), Zai Lab, Yum China Holdings and ACM Research — risked being kicked out of Wall Street if they didn't hand over audit documents with their financial statements to the US authorities.
But