China stock losses of over $ 1 trillion on exit fear

(Bloomberg) – A brutal US Chinese stock market sell-off in 2021 has shed more than $ 1 trillion in value since February and shows no signs of easing as regulators on both sides of the world continue to put pressure on companies .

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The Nasdaq Golden Dragon China Index – which tracks US-listed companies listed in China – slumped 9.1% on Friday, its strongest level since 2008 after Didi Global Inc. announced it would sell its shares off the New York Stock Exchange delist. The slump came amid a wider stock decline that day, with technology stocks bearing the brunt of the decline.

Read more: Didi begins US delisting and stock sale plan in Hong Kong

Didi’s announcement marks a startling turnaround after the company raised $ 4.4 billion in an IPO in late June, and adds even more uncertainty to other US-listed Chinese companies. Didi fell 23% to its weakest level on Friday, extending the ride-hailing giant’s slump to more than 50% below its $ 14 IPO.

“It’s sad to see what’s going on,” said Edith Yeung, general partner of Race Capital, in a Bloomberg Television interview with Didi. “When you consider that many Chinese companies are running on eggshells to please the Chinese government, to please the US government,” she said, expecting more to switch to Hong Kong listing along with Didi.

Here’s a look at how China stocks fared in the US in the face of heightened control:

Political pressure

Friday’s sell-off adds to a historically bad streak for Chinese stocks trading in the U.S. The Nasdaq Golden Dragon China Index is down 43% this year, its worst annual performance since 2008.Both Beijing and Washington have eight separate trading days with declines of at least 5%. To put this in perspective, the S&P 500 index has seen only five such declines in the past decade.

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Trillion dollar club

The dramatic slump in U.S.-listed Chinese stocks this year has burned investors who propelled them from the depths of the 2020 Covid-19 sell-off to a record high in February. In the nine months since its peak, the 95 members of the Nasdaq Golden Dragon China Index have lost more than $ 1.1 trillion in value. At the forefront of the slump is Alibaba Group Holding Ltd., whose market capitalization is down about $ 430 billion, or nearly 60%.

Feeling exposed

While Chinese stocks listed in the US have been battered this year, a global benchmark of stocks with the highest sales exposure to the country has managed to deliver solid returns for investors. The MSCI World with China Exposure Index is up about 9% this year, outperforming the Golden Dragon China Index by more than 50 percentage points, its highest level since at least 2003, according to data compiled by Bloomberg.

“This represents the steady step towards the necessary delisting of Chinese companies from the US stock exchanges,” wrote Cowen & Co. analyst Jaret Seiberg in a press release. “We don’t think Congress or the SEC see the value of listing Chinese companies in the US as the cost of not seeing the audits.”

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