Shares of Chinese internet companies including Baidu (BIDU.NASDAQ), Sohu.com, (SOHU.NASDAQ) and NetEase (NTES.NASDAQ) slumped as much as 8% on Monday on fears that recent government scrutiny of their corporate structures could hurt business, Reuters reported. Sina Corp (SINA.NASDAQ) led the sell-off, with its shares falling as much as 12%. These sites have come under scrutiny in recent weeks after China’s securities regulator sent a message on September 18 asking the cabinet to take action against structures known as Variable Interest Entities. In past years, VIEs have allowed foreign investors to gain access to and control companies in sectors like the internet that are technically closed to foreign capital. Previous reports cited analysts as saying that Beijing was unlikely to force existing companies to unravel their VIE structures, but that future approvals for such investments would receive intense review.
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