Other companies with dual listings in the US and Hong Kong also fell sharply.
The sharp drop in Chinese internet and technology stocks, which are typically listed in both New York and Hong Kong, was due to “concerns that more companies will come to market”. [US] list in the coming months,” Citi analysts said in a research report on Friday.
The HFCAA, which took effect in December 2020, prevents companies that refuse to open their books to US accounting regulators from trading on US stock exchanges.
The names cited by the SEC on Thursday are fast food company Yum China Holdings, technology company ACM Research, biotech group BeiGene, Zai Lab, as well as pharmaceutical company Hutchmed.
They are the first of about 270 Chinese companies that could be delisted from the New York Stock Exchange or the Nasdaq for failing to comply with the rules.
The SEC’s decision triggered a sell-off in Chinese stocks in the United States on Thursday.
The Nasdaq Golden Dragon China Index, a popular index that tracks more than 90 Chinese companies listed in the United States, fell 10% on Thursday, the worst daily drop since October 2008.
On Friday in Hong Kong, Yum China lost 12%, while BeiGene lost 8.3%.
US stock futures also fell, with Dow futures falling 120 points, or 0.4%. S&P 500 and Nasdaq futures fell 0.5% and 0.7% respectively.