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U.S.-delisting fears resurface for dual-listed Chinese companies

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As the Hang Seng Index is displayed outside of the Exchange Square Complex, home to the Hong Kong Stock Exchange on January 21st, 2021, screens show the Hang Seng Index.

Zhang Wei | China News Service via Getty Images

Hong Kong shares in dual-listed Chinese businesses Nio, JD.com AlibabaFears of U.S.-delisting resurfaced and Friday saw a sharp drop in stocks

Alibaba shares fell 6.56 percent by Friday afternoon. Shares of EV manufacturer Nio plunged 11.64% after it debuted in Hong Kong just a few days earlier. BaiduWhile the increase was 5.14%, it fell NetEaseThe decline was 6.94%

JD.com fell 15.67% in the aftermath reporting a quarterly loss on Thursday.

Hang Seng Tech dropped 7.5%.

These losses were caused by overnight falls in U.S.-listed Chinese stocks renewed concerns over potential delistings stateside.

Recently, the U.S. Securities and Exchange Commission named five U.S.-listed American Depositary Receipts of Chinese Companies that they claimed did not adhere to the U.S. Securities and Exchange Commission’s guidelines. Holding Foreign Companies Accountable Act. ADRs can represent shares in non-U.S. businesses and are traded on U.S. Exchanges.

China ADRs identified by the SEC as not meeting HFCAA standards are first. If regulators in the United States are not able to inspect audits, they can ban trading companies and delist those exchanges.

CNBC Pro provides more details about China

Hartmut Issel, UBS Global Wealth Management, remains optimistic about the Chinese stock market, even though he acknowledges that it is “not for faint-hearted.”

The fundamental value of these companies will not be affected, Issel, head of Asia-Pacific equities and credit at the firm, told CNBC’s “Street Signs Asia” on Friday: “Virtually all of them, the big ones anyway, these ADRs … their business is exclusively in China.”

Issel stated that virtually all have Hong Kong listings now. If there’s a delisting, you can just move on as an investor. [in the U.S.].”

He added that he knew the Chinese authorities and U.S. officials were in touch, so they could save it.

— CNBC’s Bob Pisani contributed to this report.

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