Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), Pinduoduo (NASDAQ:PDD) and several other Chinese tech stocks started Monday on a rough note after the U.S. announced export controls on American semiconductor companies aimed at preventing chips from being used for military purposes.
Pinduoduo (PDD) fell more than 7%, while Alibaba (BABA) fell 2.6%, JD.com (JD) gave up more than 4% and Baidu (NASDAQ:BIDU) lost more than 3% in early trading.
Smaller Chinese tech stocks saw losses as well, as Bilibili (BILI) dropped by almost 8%, while Weibo (WB) fell almost 6% and Tencent Holdings (OTCPK:TCEHY) edged down by 1%.
The losses came on the heels of the Commerce Department’s Friday publication of rules that said companies seeking verification to sell to China would be faced with a “presumption of denial” standard if they produce DRAM chips below 18 nm, above 128 layers for NAND chips and below 14 nm for logic chips and would have to apply for a license.
The Biden Administration will likely deny requests from U.S. companies to send equipment to companies including Yangtze Memory Technologies and ChangXin Memory Technologies if they build advanced dynamic random access memory, or DRAM, or flash memory chips.
Late last month, Morgan Stanley said it foresees a “softer recovery” for Alibaba (BABA), as Customer Management Revenue is expected to decline in the second quarter and merchant sentiment remains soft.