US-listed Chinese firms nosedive amid geopolitical, macro concerns

Faced with the growing risks of getting delisted or even banned, Chinese firms' shares in the US stock exchange have plunged again on March 14. Stocks of Chinese e-commerce giant Alibaba fell by 9%, while Baidu's shares nosedived by 12% on the US market. Besides, JD.com suffered a dip of 10% in its stocks. Notably, US-listed Chinese stocks have been falling for the last many sessions, with Alibaba's stocks tumbling by 12% last week. Currently, Alibaba's shares have been down by 27% since the start of 2022, while Baidu has declined by 20% during the same period.

This bearish trend among the investors was propelled last week when the Securities and Exchange Commission (SEC) red-flagged five US-listed Chinese firms' American Depository receipts (ADRs). ADRs are the instruments through which US investors can trade shares of non-US firms on American stock exchanges. As per the SEC, these firms' ADRs failed to comply with the Holding Foreign Companies Accountable Act that allows the commission to delist or ban non-US companies from trading in the US. Besides, JPMorgan Chase analysts have downgraded several Chinese firms, including Alibaba and JD.com. The analysts believe many global investors are reducing their exposure to the Chinese firms, causing a steep fall in the Chinese market.

However, Chinese companies' stocks have been falling due to other geopolitical reasons as well. The ongoing Russia-Ukraine crisis has added to this massive sell-off of Chinese stocks. Reports claiming that Russia may have asked for Chinese military help in the ongoing war in Ukraine have forced several investors to rethink their investments in Chinese firms.


Meanwhile, a new Covid-19 lockdown in Shenzhen, a prominent technological hub in China, has fuelled the negative sentiment among investors, causing a panic sell-off.

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