A handful of tech stocks — including BeiGene and Baidu — popped Monday after Chinese regulators axed an auditing hurdle for China-based companies trading in the U.S.
According to Reuters, Beijing scrapped a policy that required onsite inspections of overseas Chinese companies be conducted by Chinese regulators. This means U.S. regulators could inspect those sites. The move eases auditing rules impacting some 270 companies trading in the U.S.
In afternoon trading on today's stock market, BeiGene stock leapt 9.6% to 216.05, as Baidu stock surged 9.1% to 153.80. Shares of Zai Laboratories, a China-based biotech, jumped 9.3% to 49.68. Alibaba, another tech stock, rose 6.6% to 117.50. JD.com advanced 7.1% to 63.31.
Tech Stocks: Focus Remains On China
Under Securities and Exchange Commission rules, the Public Company Accounting Oversight Board must inspect the audits of companies trading in New York. Reuters notes companies usually store their audits in China. The new decision opens access to U.S. inspections of that paperwork.
The change eases "cross-border regulatory cooperation, including joint inspections, which will help safeguard interest of global investors," the China Securities Regulatory Commission said in a written statement. But those companies must also protect state secrets, the agency said.
All together, the effort could help hundreds of China-based companies avoid delisting in the U.S. In March, the SEC identified a group of companies in violation of SEC auditing rules. The group — which includes tech stocks like BeiGene, Zai Lab and Hutchmed — was given a two-year deadline to comply.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
