A brutal selloff of Chinese stocks trading in the US has erased more than US$1 trillion in value since February and shows no signs of easing, as regulators on both sides of the globe continue to put pressure on the firms.
The NASDAQ Golden Dragon China Index — which tracks China-exposed firms listed in the US — plunged 9.1 percent on Friday, the most since 2008, after Didi Global Inc (滴滴) said it is planning to delist its shares from the New York Stock Exchange.
The Didi announcement marks a stunning reversal of fortunes after the firm raised US$4.4 billion in an initial public offering (IPO) in June, and adds even more uncertainty to the prospects for other US-listed Chinese firms. Didi shares fell 23 percent at their weakest on Friday, extending the ride-hailing giant’s slump to more than 50 percent below its US$14 IPO price.
Photo: AP
“It’s sad to see what’s going on” with Didi, Race Capital general partner Edith Yeung (楊珮珊) told Bloomberg Television in an interview.
“When you consider a lot of Chinese companies are walking on egg shells to please the Chinese government, to please the US government,” she said, expecting more to join Didi in shifting toward a Hong Kong listing.
Friday’s selloff adds to what has been a historically bad stretch for Chinese stocks trading in the US. The Golden Dragon China Index has dropped 43 percent this year, putting it on pace for its worst annual performance since 2008.
An unrelenting wave of policy crackdowns by both Beijing and Washington has resulted in eight separate trading days with declines of at least 5 percent. To put that in perspective, the S&P 500 Index has only experienced five such declines over the past decade.
The dramatic plunge seen by US-listed Chinese stocks has burned investors who rode them from the depths of last year’s COVID-19 selloff to a record high in February.
In the more than nine months since its peak, the Golden Dragon China Index’s 95 members have shed more than US$1.1 trillion in value combined.
Headlining the plunge is Alibaba Group Holding Ltd (阿里巴巴), which has seen its market capitalization drop by about US$430 billion, or nearly 60 percent.
While Chinese stocks that are listed in the US have been pummeled this year, a global gauge of stocks with the highest sales exposure to the nation has delivered investors solid returns.
The MSCI World with China Exposure Index is up about 9 percent this year, outperforming the Golden Dragon China Index by more than 50 percentage points, the most since at least 2003, data compiled by Bloomberg showed.
“This represents the steady march toward the required delisting of Chinese companies from US exchanges,” Cowen & Co analyst Jaret Seiberg wrote in a note. “We do not believe Congress or the SEC [US Securities and Exchange Commission] see the value of letting Chinese firms list in the US as worth the cost of not being able to inspect the audits.”
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS