China is cracking down on stocks that trade on the US market.

Today, China is cracking down on stocks that trade on the US market. Here are two issues. The first was the Didi which is the company listed on the US market just a couple of days ago. Didi prohibited new users from downloading its app on Friday while they review its cybersecurity measures. And China is stepping up its oversight on the flood of Chinese listings in the U.S., which are overwhelmingly tech companies. The crackdown on tech is not a new trend, but because the nation has the ability to move quickly, any action could wreak havoc in major area on Wall Street. Market analysts say it could not only threaten the IPOs in the pipeline, but it could also pressure the popular Chinese ADR market. 

Bloomberg

The Hang Seng China Enterprises Index tumbled by as much as 3% on Thursday, extending its loss since a February high to about 19%. The gauge was dragged down by some of the biggest internet names including Meituan, Alibaba Group Holding Ltd., and Tencent Holdings Ltd., which were down by at least 3.6%. Investors now worry that more troubles are ahead for the sector as Beijing mulls further rule changes that would allow them to block Chinese firms from listing overseas. 

Dave Nadig, chief investment officer and director of research at ETF Trends and ETF Database, didn't expect anything drastic to come from China's regulatory crackdown, though he acknowledged it was worth monitoring.

“I think it’s worth a little caution here,” he said. “I don’t think any of these companies are just going to go away. I don’t think they’ll do anything that dramatic. I think these are wrist slaps from China that will result in these companies coming a little more under the fold of the Chinese Communist Party.”

The Chinese companies wouldn't be delisted on the US market. But we must consider that it should be going down further. There is gray, Investors have to consider these risks for the investment to Chinese companies.

 

References:

https://www.cnbc.com/2021/07/07/china-is-cracking-down-on-stocks-that-trade-on-us-exchanges-what-it-means-if-you-hold-them.html

China is cracking down on stocks that trade on U.S. exchanges. Here's what it means if you hold them

https://www.cnbc.com/2021/07/08/china-didi-crackdown-ipo-slowdown-would-serve-investors-pro-says.html?&qsearchterm=china 

An IPO slowdown would benefit ETF investors, Renaissance's Kathleen Smith says amid China's Didi crackdown

 

https://www.bloomberg.com/news/articles/2021-07-08/doom-extends-for-china-tech-as-key-gauge-nears-bear-market

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