NetEase.com (NTES) Inc., China’s second- biggest online games operator, plunged to a four-month low amid concern about slower global economic growth and reports on accounting fraud at Chinese-listed companies.
The company’s American depositary receipts tumbled 8 percent to $41.58, the lowest since Feb. 9, as of the 4 p.m. close New York time. It earlier fell as much as 9.3 percent. NetEase led declines among U.S.-listed Chinese Internet stocks, including Sohu.com Inc. (SOHU), Baidu Inc., Sina Corp, and Shanda Interactive Entertainment Ltd. (SNDA) The Standard & Poor’s 500 Index fell for the fourth straight day, losing 1.1 percent. The Dow Jones Industrial Average slipped 0.5 percent.
“People on Wall Street are cutting risk when the macro economy doesn’t look very well, and they obviously started the selloffs with some Chinese stocks,” said C. Ming Zhao, an analyst at Susquehanna International Group LLP in Boston. “The market has concerns about previous accounting fraud at some companies, which has hit investors’ confidence.”
Longtop Financial Technologies Ltd. (LFT), a Hong Kong-based software provider, was sued by an investor alleging the company overstated profit margins and concealed adverse facts last month. The company said May 23 that auditor Deloitte Touche Tohmatsu Ltd. resigned and the U.S. Securities and Exchange Commission was investigating Deloitte’s claims.
Short-seller Carson Block at Muddy Water Research said last week Sino-Forest Corp., the Mississauga, Ontario- and Hong Kong- based operator of tree farms, overstated its timberland holdings and production, an allegation Sino-Forest denied. Sino-Forest today released documents on its website it says reveal supporting agreements on purchase contracts and plantations in China’s Yunnan province.
Sohu.com tumbled 5.5 percent to $73.60, the lowest in more than four months. Baidu lost 4.7 percent to $126.97, the lowest since March 21. Sina slid 2 percent after plunging 11 percent at the end of last week.
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