JD.com (9618) said its Nasdaq-listed subsidiary Dada Nexus was found to have certain suspicious practices casting doubt on its online advertising and marketing services revenues and operations and support costs for the first three quarters of 2023.
Shares of both companies fell in the US.
The audit committee of Dada’s board of directors has determined to conduct an independent review with the assistance of independent professional advisers.
Mainland media reported that the incident involved deceit by a certain individual and the company has reported to the police and the incident has limited impact to the firm.
Meanwhile, China’s securities regulator is allowing mutual fund managers to sell more shares than they buy each day, three sources said, removing a ban introduced late last year aimed at propping up a flagging stock market.
The China Securities Regulatory Commission late last year barred major mutual fund companies from selling shares on a net basis on any day, answering top leadership calls to stabilize a market that was among the world’s worst performers.
One source directly aware of the change suspected the policy shift was partly due to growing redemption pressures on funds, saying it was understandable as “if you cannot net sell stocks, you don’t have the money to repay redeeming investors.”
This came as Hong Kong and Chinese stocks extended their declines yesterday.
Hong Kong stocks dropped 310 points as investors braced for US and China inflation data this week.
The Hang Seng Index fell 1.9 percent to 16,224 while the Shanghai Composite Index slipped 1.4 percent to below 2,900 points.
The Hang Seng Tech Index dropped 3 percent to a 13-month low. Meituan (3690) lost 4.9 percent although the firm has become Hong Kong’s second-largest food delivery platform since debuting in the city last May.
Alibaba (9988) fell 1.8 percent as its cloud unit vice president Chen Xuesong has reportedly left the company.
Television Broadcasts (0511), however, surged 11.8 percent amid its executives expressing confidence that the company would see a turnaround this year with no further layoffs.
Meanwhile, UBS expected the Hong Kong stock market to outperform the A-share market and capital to return to the city amid possible US interest rate cuts, but believed that A shares have gone through the most difficult times.
UBS warned that de-globalization would continue and the global economy would become fragmented.
In money markets, the onshore yuan fell to a one-month low of 7.1599 against US dollar yesterday.
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