Fresh concerns about companies from China being kicked off American exchanges have helped push an index of U.S.-traded Chinese stocks into bear-market territory.
The S&P/BNY Mellon China Select ADR Index tracks the American depositary receipts for 48 major U.S.-listed Chinese companies. The technology-heavy gauge includes e-commerce companies Alibaba Group Holding Ltd. and JD.com Inc., and electric-car maker Nio Inc.
The benchmark tumbled 6.4% Wednesday, leaving it 23% below a record high hit on Feb. 16. A bear market is usually defined as a drop of at least 20% from a recent peak. It extended those losses Thursday, falling another 2.2%.
Chinese tech stocks are partly struggling because of the threat of delisting, as well as heightened regulatory risk at home, said Wei Wei Chua, a portfolio manager at Mirae Asset Global Investments in Hong Kong. In addition, investors are rotating into more economically sensitive sectors, and higher bond yields have put pressure on the valuations of fast-growing companies. “It’s a perfect storm” of negative news, Mr. Chua said.
The Securities and Exchange Commission said Wednesday that it has started to implement a law requiring accounting firms to let U.S. regulators review the financial audits of overseas companies. The law was passed at the end of the Trump administration. It could in time lead to foreign companies that don’t comply being delisted from the New York Stock Exchange or the Nasdaq Stock Market, and will mainly affect businesses from China.
