What happened
Shares of Sea Limited (SE 1.20%), a digital entertainment and e-commerce company, jumped today as shares of some Chinese tech stocks spiked. Sea Limited is based in Singapore, but the Chinese tech giant Tencent Holdings owns an 18.7% stake in the company.
Sea's share price was up by 9.6% as of 2:06 p.m. ET.
So what
Investors were pushing up Sea's stock today likely on the news that the Chinese government is open to working with U.S. regulators to keep Chinese stocks listed on U.S. exchanges.
Image source: Getty Images.
The U.S. Securities and Exchange Commission (SEC) said recently that nearly a dozen Chinese companies could be delisted for not allowing regulators to audit the companies' financial records.
Chinese regulators have been concerned that allowing the audits could give the U.S. access to state secrets.
But over the weekend, China's Securities Regulatory Commission (CSRC) said that it may allow U.S. regulators to conduct on-site audits in China, where official company documents are held, according to Reuters.
While nothing has been officially agreed upon between the two regulatory commissions, investors pushed Chinese stocks higher today on the potential for an agreement. That led Tencent Holdings' stock higher, which holds a significant stake in Sea Limited.
With Tencent rising, Sea's stock climbed right along with it.
Now what
Investors should keep in mind that there are likely still more conversations ahead between the U.S. and Chinese regulators. Any negative news that comes out about Chinese stocks potentially being delisted could send the share price of Tencent and Sea down again.
Even with today's gains, Sea's share price has plummeted 58% over the past six months. And with a lot of details still to be hammered out between the two countries, it may be best for investors to brace themselves for some more volatility.
