Chinese tech stocks on pace for worst week in a year

Yahoo Finance Live’s Jared Blikre and Akiko Fujita discuss Chinese tech stocks as they face their worst week in a year.

Video Transcript

AKIKO FUJITA: --rocked. Chinese tech stocks are now on track for its worst week in a year. Ride hailing company DiDi seeing the biggest declines on the day. And I want you to look at this chart, down nearly 40%. I mean, we're slowly entering penny territory for this company.

This is a company that's already announced that they will be delisting from the New York Stock Exchange, largely because of regulatory challenges it's faced back home. The company was scheduled to relist on the Hong Kong Exchange, but that listing is reportedly now in jeopardy. Bloomberg reporting that DiDi has suspended preparations for its planned Hong Kong IPO after Chinese cyber regulators said the company's plan to protect user data just does not go far enough.

And Jared, I had to do a double take here today. DiDi-- I mean, a 52-week low, I think that goes without saying when you've got a stock that's down nearly 40%. But it hasn't even been one year since they went public. You look at the number back then. It was a $4.4 billion IPO. I mean, what is the stock down now, more than 75%?

JARED BLIKRE: That's right, Akiko. I was just looking on the YFi Interactive at the stunning carnage that we're seeing in some of these stocks today. DiDi itself is down 38%. I'm just going to take a look at the market cap of all these companies. It's now a $10 billion company. I remember when that was $100 billion company. I believe that is correct.

So here's today's price. 38% in one day is just absolutely ridiculous for a company. This is a company, the Chinese regulators came after it just days after its initial listing. It didn't really have a chance. So you can see, down 85% from its opening day. And the list goes on in terms of who else has been affected.

Now regulators have come up against a lot of these companies for different reasons. And to be fair, it's been some of the larger ones. But check this out. This is a year-to-date look of everything that's gone on, excuse me, in these Chinese stocks. Some of these are down 73% this year alone. And all of these are down-- well, almost all of them are down 20% or more. So really incredible to see the price action being reflected, as it looks like the West is kind of decoupling from the East in so many different ways. And this is just a microcosm of that.

AKIKO FUJITA: And Jared, on that note, there are five other Chinese companies we're watching really closely for a different reason now. And this is because the SEC has now come forward by listing companies that they say are just not in compliance with the accounting rules within the US. And I want to point you to these companies here. The one that stands out, of course, is Yum China. And we have seen significant declines of their US-listed shares there.

The SEC coming out with that list of companies that are not in compliance with this law that's now known as a Holding Foreign Companies Accountable Act that's been signed into law, but essentially says that these companies need to open their books to US accountants. These are companies that the SEC says have not done that. And what that means is it essentially starts a three-year clock for these companies to come into compliance. While we're talking about five companies the SEC has singled out, we saw the other Chinese-listed companies in the US fall yesterday on the back of that, too, back of that announcement.

JARED BLIKRE: That's right, and in particular, Yum Brands was the one that caught my attention. I really didn't know or have those other companies on my radar. But you can see, the stock is down 34% over the last year. Now if I put a max chart on, you can see this was a stock that was in a relatively nice and stable uptrend, but just got completely upended by all the chaos created, not only by the pandemic. In fact, through the initial recovery in the pandemic, you can see some nice gains here, but really just falling off a cliff over the last year or so.

So more, I guess, irons in the fire for everybody to think about here as we try to get our heads around exactly what the eventual end game is going to look like for a lot of these companies. And I think we simply don't know. A lot of these companies not going to be listed here, but which one's?

AKIKO FUJITA: Which one and where do they go if companies like DiDi are now not being allowed to list in Hong Kong because of regulators? A story we're going to continue to watch, but I want to shift gears here--