Chinese technology stocks rose as Beijing sought to resolve a key sticking point in its audit dispute with the United States, assuaging investor concerns about shares being delisted from American exchanges.
The Hang Seng Tech Index gained 5.1 percent, the most in nearly two weeks, with shares of companies listed in the United States such as Bilibili Inc., XPeng Inc., and Baidu Inc. among its top gainers.
China intends to change a rule that prevents offshore-listed companies from sharing sensitive financial data with foreign regulators, according to a statement issued by the Chinese government on Saturday. The changes may pave the way for US authorities to gain full access to auditing reports of Chinese firms listed on the exchange, assisting in the resolution of a key bilateral dispute that had investors concerned.
On Friday, the Nasdaq Golden Dragon Index of Chinese firms rose after Bloomberg reported on China’s considerations. The mainland’s financial markets are closed on Monday due to a public holiday.
“The modification will partially address concerns about delisting risks if cross-border regulatory cooperation proceeds as planned,” Citigroup analyst Alicia Yap wrote in a report on Monday.
However, some analysts warn that more decisive action from Chinese authorities is required to fully resolve the conflict with US regulators over delisting risks. They go on to say that certain companies, such as state-owned enterprises and tech firms with more sensitive data, may eventually be barred from listing in the United States.
The Hang Seng Tech Index has fallen nearly 60% since its peak in February 2021, owing to Beijing’s regulatory crackdown and uncertainty about the fate of Chinese tech giants trading in the United States.
This is despite the fact that the index has recovered more than 30% from a record low in mid-March, following Beijing’s pledge to keep capital markets stable and regulatory changes more predictable.
“In order to completely alleviate investors’ concerns about ADR delisting, we need to see or have some form of concrete actions finalized from China rather than pipeline frameworks that are still in the works,” said Kelvin Wong, an analyst at CMC Markets.