U.S.-listed shares of China companies drop on fears of more crackdowns

The U.S.-traded shares of prominent Chinese companies were under pressure on Tuesday after the Asian country’s officials launched a cybersecurity review of Didi, fueling concerns about government risk to Chinese stocks. Shares of Tencent Music Entertainment fell more than 9%, while JD.com, Trip.com, Alibaba and agriculture tech stock Pinduoduo also slid.

Shares of Didi fell 20% in after the Chinese government blocked the company’s app from being downloaded. The move appears to be part of a broader crackdown from the country, and a Chinese cabinet official said that regulators are adopting new measures to monitor cross-border data security and potential securities fraud, according to Reuters. The action by Chinese regulators comes less than a week after Didi listed its shares in the U.S. Two smaller recent listings — Full Truck Alliance and Kanzhun — are also under review by regulators and saw their shares fall sharply on Tuesday.

Concerns about investing in Chinese stocks have grown in recent years, with former president Donald Trump attempting to ban investment in companies with ties to the Chinese military and U.S. regulators pushing for greater scrutiny of some foreign listings. Investment firm Oppenheimer said in a note that the U.S. efforts for greater oversight could be a cause of these security reviews.

Bank of America analyst Eddie Leung said in a note that the government data review could be an ongoing risk factor for investors. One exception to the struggles on Tuesday morning was Weibo, which jumped more than 6% after Reuters reported that the company’s chairman was negotiating a deal to take the social media company private.

U.S.-listed shares of China companies drop on fears of more crackdowns, CNBC, Jul 7