Chinese stock rally in US stalls on growth, delisting concerns
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[NEW YORK] US-listed Chinese stocks extended losses on Friday (Mar 25), as worries over the tech sector's earnings and the risk of local firms being kicked off US exchanges brought a halt to a recent revival.
The Nasdaq Golden Dragon China Index closed 4.7 per cent lower, after falling 1.7 per cent in the prior session. E-commerce giant Alibaba Group Holding slid 1.9 per cent on Friday, while Internet peers JD.com, Baidu and Pinduoduo each dropped more than 1.5 per cent.
Chinese stocks are coming off a strong rally since the middle of March, with sentiment having been boosted by share buybacks and signs that Beijing's regulatory crackdown on the sector is easing. The Nasdaq Golden Dragon China Index is up more than 40 per cent since hitting an intraday low on Mar 15, though remains around 18 per cent down year to date.
"There is a lot of confusion in the market about delistings," said Jian Shi Cortesi, a portfolio manager at GAM Investment Management. "While Asia specialists have studied the impact in depth, many other investors are not clear how it may unfold."
Heightened concerns among US allies about China's relationship with Russia amid the Ukraine war is also worrying investors, she said.
Angst over the future of Chinese stocks on US exchanges persists. On Thursday, the US audit watchdog said speculation about a deal that would spare Chinese firms being removed from American stock exchanges was "premature".
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Meanwhile, earnings from peer Meituan on Friday showing a third straight quarter of slowing sales growth led to scepticism to its outlook, especially against a backdrop of rising US interest rates. Meituan's American depositary receipts dropped 0.4 per cent after falling as much as 7 per cent during the day.
Elsewhere, Chinese electric vehicle manufacturer Nio sank 9.4 per cent after it reported worse-than-expected results amid mounting industry supply chain pressures, while its peers Xpeng and Li Auto declined 7.6 per cent and 5.2 per cent respectively. BLOOMBERG
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