Hong Kong

Hong Kong Tech Stocks Rise on Potential Audit Deal

Tech stocks in Hong Kong edged higher on Friday after news that Washington and Beijing may reach an audit deal that could resolve some issues with Chinese companies’ listings on US exchanges.

Shares of Alibaba Group Holding Ltd., Jd.com Inc, Baidu Inc., and Meituan posted gains between 1.9% and 5% following the report.

The increases helped other Asian stocks trade in the green, with MSCI’s broadest index of Asia-Pacific shares outside Japan rising 0.5% and the Hang Seng Index adding 1%.

Potential US-China Audit Deal

The US and China were reportedly close to granting Washington permission to review audits of Chinese firms listed on the New York Stock Exchange (NYSE), helping them avoid a potential delisting.

Sources with knowledge of the matter said bankers in Hong Kong were notified about a possible deal this week.

Further details about the potential agreement and date of an announcement have not been provided, although the Public Company Accounting Oversight Board (PCAOB) said any deal would include full US access to Chinese auditors.

The latest development came after US regulators warned about pulling out the stocks of more than 200 Chinese companies from the country’s exchanges if they fail to provide the PCAOB access to their financial audits every three years.

Major tech groups Alibaba, JD.com, and Baidu were among the Chinese firms with dual listings deemed non-compliant by the Securities and Exchange Commission (SEC).

That has led the value of the three companies to falter in both US and Hong Kong exchanges, adding to a broader slump in tech stocks this year.

Audits of US-listed Chinese companies are currently not available to foreign watchdogs for review due to Beijing’s concerns that it may compromise state secrets and national security.

This month, five state-owned Chinese companies had already announced their plans to leave the US stock market before they were delisted in 2024.

Alibaba, the largest dual-listed company, has started making preparations to move its primary listing to Hong Kong.

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