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Chinese stocks plummet in US on brutal selloff in Asia

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(Bloomberg) — U.S.-listed Chinese stocks resumed a sharp sell-off on Monday after concerns about Beijing’s close relationship with Russia added to losses caused by its crackdown on tech giants and the increasing risk of being banned from the US stock market.

The Nasdaq Golden Dragon China Index fell as much as 13%, adding to last week’s 18% contraction. ADRs from e-commerce giant Alibaba Group Holding Ltd. and rival JD.com Inc. each fell by at least 10%, while Pinduoduo Inc. plunged as much as 19%. Search engine operator Baidu Inc. fell 14%. Alibaba has plunged more than 30% this year, leaving it headed for its lowest level since July 2016.

The drop followed a report that Russia had asked China for military assistance for its war in Ukraine. Despite China denying the information, traders are concerned that Beijing’s possible opening to Vladimir Putin could spark a global backlash against Chinese companies, including sanctions. The US and China will hold their first high-level face-to-face talks since the invasion today.

“There is a horrible perception around China,” said Adam Crisafulli of Vital Knowledge. “Fears of being banned from the stock market and renewed Covid pressures dealt a double blow to the few bulls that will remain. There is a complete sell-off and even the optimists think the space is too tough at the moment. Valuations may be cheap and the PBOC may be one of the few central banks easing monetary policy, but this is not enough.”

Adding to the negative perception is that analysts at JPMorgan Chase & Co. have downgraded at least 10 Chinese internet stocks to sell-equivalent ratings, including JD.com, Alibaba and Tencent, which the firm says are stocks in which it does not It is convenient to invest in the short term. “Due to rising geopolitical and macroeconomic risks, we believe a large number of global investors are in the process of reducing their exposure to the Chinese internet sector, leading to significant outflows of funds,” the firm wrote in a report dated 14 June. March.

In Asian trading on Monday, the Hang Seng China Enterprises Index fell its biggest since November 2008, while the Hang Sang Tech Index fell 11% in its worst decline since the gauge was lowered in July 2020. This removes US$2.1 billion in value from the previous year’s high.

original note:

Chinese Stocks Spiral in US After Brutal Sell-off in Asia

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