(Bloomberg) -- Chinese technology stocks slid after the U.S. securities regulator played down the prospect of an imminent deal to keep local firms listed on American exchanges.
The Hang Seng Tech Index, which tracks some of the biggest Chinese tech firms, fell 1.4% on Thursday, snapping a three-day advance. JD Health International Inc. and Baidu Inc. were among the worst performers.
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A spate of recent regulatory developments are making traders wary again, reminding them of the risks of investing in China stocks. The Securities and Exchange Commission added Baidu Inc. to a growing list of Chinese firms that may get kicked off American stock exchanges barring better audit disclosure. On Thursday, the Chinese securities regulator said talks are continuing with the U.S. on the issue.
Just a day earlier, Beijing vowed greater scrutiny on online streaming platforms, spooking investors who were expecting regulatory crackdowns to ease after Vice Premier Liu He's mid-March pledge to stabilize capital markets and support the economy. China's state council reiterated similar promises again late Wednesday.
There seems to be “irreconcilable difference” between the two countries, said Hao Hong, head of research at Bocom International Holdings in Hong Kong. “China wants to disclose some but not all companies, but the U.S. demands full disclosure and compliance is measured on a country level not on individual companies level.”
“I think Chinese firms should be preparing for their eventual return,” Hong added.
Thursday's losses damped the rebound in the Hang Seng Tech Index since March 15 to 31%. The gauge is still down more than 19% this year. The Hang Seng Index closed 1.1% lower, while China CSI's 300 Index slid 0.7%.
Also weighing on the outlook for Chinese equities was the country's lockdowns on major cities that are disrupting business operations and hurting consumption. China's purchasing managers' indexes showed both manufacturing and services activity falling into contraction in March, missing estimates. Economists have been cutting growth forecasts of late, citing the Covid outbreak.
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