Chinese tech stocks rallied after Beijing sought to ease audit dispute with U.S., boosting investor’s sentiment.
In early morning trade, the Hang Seng index climbed as much as 2.9%, lead by Bilibili Inc., XPeng Inc. and Baidu Inc., which all have shares also listed in the U.S.
Chinese authorities are planning to modify a rule that restricts offshore-listed firms from sharing sensitive financial data with foreign regulators, Beijing said on Saturday. The move would pave path for U.S. authorities to gain access to audit reports of Chinese listed firm in the Wall Street.
After Bloomberg reported the development by Chinese authorities, the Nasdaq Golden Dragon Index of Chinese firms jumped on Friday as Bloomberg reported of China’s considerations.
“The modification will partially address concerns of delisting risks if the cross-border regulatory cooperation could go smoothly as laid out per the rule,” Citigroup analyst Alicia Yap wrote in a report on Monday.
However, according to some market strategist more definitive actions is needed from Chinese authorities to resolve the tension. They add that certain companies like state-owned enterprises and tech firms with more sensitive data may be barred from U.S. listings ultimately.
“In order to negate investors’ fears totally on the aspect of ADR delisting, we need to see or have some form of concrete actions finalized from China rather than pipelines framework that are still in the midst of drafting,” said Kelvin Wong, analyst at CMC Markets, as reported by Bloomberg.
