FAST NEWS: Baidu Joins List of U.S.-Traded Chinese Stocks in Danger of Delisting

The latest: China’s dominant search engine Baidu Inc. (BIDU.US; 9888.HK) on Wednesday was added to a growing list of companies facing the risk of forced delisting from U.S. stock exchanges.

Looking Up: Baidu wasn’t the only company added to the list. Its video affiliate iQiyi (IQ.US) and online brokerage Futu (FUTU.US) were also among five companies added to the U.S. Securities and Exchange Commission’s (SEC) updated list.

Take Note: Baidu is the largest Chinese company added to the list to date, with a market value of around $50 billion. Before that, the biggest Chinese tech company on the list was Weibo (WB.US; 9898.HK), often called the Twitter of China, with a much smaller market value of about $6 billion.

Digging Deeper: With the latest additions to the list, the SEC has now named 11 Chinese companies that are in danger of delisting under a U.S. law passed in 2020. In fact, most or all of the nearly 300 Chinese companies now listed in the U.S. face a similar delisting threat. Many of those are likely to be added to the list in the future as the SEC keeps up pressure on China’s securities regulator to reach a key information-sharing deal that would end the delisting threat. Such a deal would give the SEC access to U.S.-listed Chinese companies’ auditor records when the SEC suspects financial irregularities. Such information sharing is currently banned under Chinese law, but the two sides are in talks to negotiate an agreement that would end that ban.

Market Reaction: Baidu shares fell 2.6% in Wednesday trade in New York. Its Hong Kong-listed shares fell 3.2% on Thursday.

Reporting by Doug Young

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