Chinese US stocks soar as delisting talks progress

Chinese US stocks soar as delisting talks progress

(Bloomberg) — U.S.-listed Chinese stocks rose the most in more than two months as talks between the two countries to avoid closing companies on the New York Stock Exchange intensify.

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The Nasdaq Golden Dragon China index jumped as much as 6.5%, the highest since June. Bloomberg News reported that regulators in China have told accounting firms to be ready to bring audit documents for U.S.-listed Chinese companies to Hong Kong, where they can be reviewed by the U.S. Public Enterprise Accounting Oversight Board. a person who asked not to be identified as discussions are private. O

Shares of US-listed tech giants including Alibaba Group Holding Ltd., JD.com Inc. and Pinduoduo Inc., all rose at least 9% on Thursday. Meanwhile, NetEase gained 5.1%, while electric vehicle makers Nio Inc. and Li Auto Inc. increased by 6.5% and 4.2%, respectively.

The PCAOB declined to comment, while the China Securities Regulatory Commission and the US Securities and Exchange Commission did not immediately respond to requests for comment. The Wall Street Journal reported on this matter earlier.

“This is a fascinating development,” said Ed Moya, senior market analyst at Oanda Corp. “Official confirmation is needed, but expectations are growing that this would be done as both countries are dealing with economic fragility,” he added.

Read more: US-China delisting talks move forward with inspections in Hong Kong

Such a move would go a long way toward allaying fears of a mass forced delisting of US-listed Chinese stocks, something that has weighed on equities for more than a year. Earlier this month, China Life Insurance Co., PetroChina Co. and China Petroleum & Chemical Corp. were among a group of state-owned companies that announced plans to exit US stock markets. Dow Jones reported on the news earlier.

The rally in US trading follows what was the best day in nearly four months for Hong Kong’s Hang Seng Tech index, which rose 6% on Thursday. This helped push the city’s benchmark Hang Seng index up 3.6%, making it the best performer among Asia’s leading equity indicators.

In addition to the Chinese government’s 1 trillion yuan ($146 billion) support to the economy, traders cited short coverage and an adjustment of positions ahead of Jackson Hole.

“Whether the rumor about an audit deal is true or not, Hong Kong shorts have pressed their bets in a light summer tape,” said Brendan Ahern, chief investment officer at Krane Fund Advisors LLC. “We are gearing up for an epic short squeeze that is contributing to today’s movement.”

Stocks in Hong Kong fell to their lowest level in months this week as global risk sentiment spread ahead of the Federal Reserve’s Jackson Hole symposium. Concerns over China’s economic growth, with a deepening housing crisis and energy shortages spurred by a severe drought, have added to the sadness.

After three days of losses, the Hang Seng index also looked ripe for a rally to some market watchers based on various technical indicators.

The indicator was close to “oversold” levels in monthly measures of the relative strength index, approaching the threshold of 30 that has never been reached in data since 1972. Morgan Stanley strategist Gilbert Wong said that “the risk of tightening in China and Hong Kong Stocks are rising.”

(Adds details throughout, quote in ninth paragraph, updates prices.)

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