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.
“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.”
POTENTIAL SETBACK: Although Chinese chip designers and foundry firms already have US EDA software, they might be unable to update those programs under new US rules The US’ latest ban on advanced electronic design automation (EDA) software exports to China might hinder Chinese chip companies from accessing advanced semiconductor technology, as they attempt to upgrade to 3-nanometer processes in the next three to five years, market researcher TrendForce Corp (集邦科技) said yesterday. The US Department of Commerce’s Bureau of Industry and Security on Friday announced bans on EDA tools for gate-all-around field-effect transistors (GAAFET), a new-generation semiconductor technology that US chipmaker Intel Corp and Samsung Electronics Co from South Korea are adopting to make 4-nanometer and 3-nanometer chips. The bureau in a statement said that gate-all-around field-effect transistor
WIDENING THE FIELD: Human resources managers must drop prejudices regarding gender, appearance and age to find the best candidates, Micro Technology said The job market for Taiwan’s semiconductor industry remained tight this quarter, as hiring activity slowed from a record high last quarter, a survey released yesterday by online human resource firm 104 Job Bank (104人力銀行) showed. Ongoing labor shortages have prompted local semiconductor firms to recruit more women and foreigners in Taiwan and in Southeast Asia, the job bank said. The talent gap in the first quarter reached 35,000 people per month, a surge of 39.8 percent from the same period last year, as the contactless economy and digital transformation shore up demand for semiconductors, 104 Job Bank said in its annual report
POSITIVE CULTURE: Pursuing 12-inch wafers earlier than peers helped TSMC lead the industry, said a former executive, whose main regret was working for SMIC in China Corporate culture at Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is what made the chipmaker a leading player in the global industry, a former executive said in an interview with California’s Computer History Museum. “One of the really important reasons that TSMC succeeded” is the culture at the firm, where “if equipment went down at two o’clock in the morning, we just called an equipment engineer,” and the worker would not complain, said former TSMC joint chief operating officer Chiang Shan-yi (蔣尚義). “We didn’t really do anything special, anything great, but we didn’t make any major mistakes,” when compared with competitors, such
DISMAL OUTLOOK: A Citigroup analyst predicted firms face ‘the worst semiconductor downturn in at least a decade,’ due to inventory build and the potential of a recession Semiconductor stocks tumbled after Micron Technology Inc became the latest chipmaker to warn about slowing demand, triggering concern that the industry is heading into a painful downturn. In the US on Tuesday, the Philadelphia semiconductor index sank 4.6 percent, with all 30 members in the red, its biggest drop in about two months. In Asia, chip stocks from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to Samsung Electronics Co, SK Hynix Inc and Tokyo Electron Ltd slumped. Investors are growing increasingly skittish as the notoriously cyclical industry is hurtling toward a prolonged slump after years of widespread shortages that led to heavy