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China Stocks in US Jump as Beijing Talks Up Foreign Listings

A meeting chaired by China’s top economic official said there was positive progress on the issue of Chinese companies being delisted from US exchanges.


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Alibaba Group's shares slumped in December 2020 after the then buyback amount of $10 billion failed to ease concerns about a regulatory crackdown on co-founder Jack Ma's e-commerce and financial empire. Reuters file photo.

 

US-listed China stocks surged in premarket trading on Wednesday after China said it would roll out measures to boost the economy and support companies listing on foreign exchanges.

Chinese and US regulatory bodies have made positive progress on the issue of Chinese companies possibly being delisted from US exchanges, according to remarks after a meeting on Wednesday under the State Council chaired by Vice Premier Liu He, who is President Xi Jinping’s top economic advisor.

The two sides are working on a concrete cooperation plan, a summary of the meeting said, adding that China will continue to support various enterprises to seek listings in overseas markets.

U.S. listed shares of Pinduoduo jumped 36%, while JD.com and Alibaba were both up about 20% in premarket trading. Didi Global, Baidu, Bilibili, Nio and Weibo WB.O also rose between 18% and 38%.

The remarks were also seen indicating China may ease up on a regulatory crackdown on the tech sector.

“It’s quite positive, at least for the moment, as Liu addressed some key concerns in the market, especially regarding the regulatory crackdown,” said Lu Ting, chief China economist at Nomura Holdings in Hong Kong. “Liu also demands the PBOC to take action, so I believe the PBOC will do some easing in the next couple of months.”

 

READ MORE: China Stocks Delisting From US: Everything You Need to Know

 

Rapid Response

The speed at which Beijing has responded to this week’s selloff would suggest it does not want to let things drift out of control, said Russ Mould, investment director at AJ Bell.

“Its key goal is common prosperity and stock markets matter because a lot of Chinese retail investors have money in equities, so their wealth is at stake if shares are plummeting in value,” he said.

On Friday, the China Securities Regulatory Commission said in a statement that it was in talks with the US Public Company Accounting Oversight Board (PCAOB) and making progress.

“We believe the two sides will be able to jointly work out cooperation arrangements that comply with the legal and regulatory requirements of both countries in an expedited manner, to better protect global investors and promote the stability and robustness of the two capital markets,” it said.

US experts remain skeptical though over whether any deal is possible.

“I think it is unlikely there has been a breakthrough,” says Jeff Mahoney, General Counsel with the US-based Council of Institutional Investors. “There appears to be an unwillingness for the US to make a compliance exception for China.”

By Kevin Hamlin and Reuters

 

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Kevin Hamlin

Kevin Hamlin is a financial journalist with more than 40 years of experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.

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