Investors Spooked by China

BEIJING — Investors dumped the stocks of some of China’s biggest Internet companies, as scandals with some smaller Chinese firms have shaken Wall Street’s confidence in the country’s businesses.

U.S.-listed shares of China’s leading search engine, Baidu.com Inc., and Sina Corp., the operator of the country’s Twitter-like messaging service, plunged 16% and 18%, respectively, in the last two days of trading on the Nasdaq Stock Market even though these companies haven’t been accused of wrongdoing.

A series of alleged accounting frauds this year at little-known Chinese companies listed in the U.S. has triggered a sharp shift in sentiment among investors, who are now worried about hidden business risks or financial problems.

“If the whole sector’s sentiment is negative, then investors tend to be panicking, and then they sell the most liquid names, regardless of whether there are really any problems,” said Jeffries analyst Cynthia Meng. “We don’t think that the flagship [Chinese] Internet names have accounting issues.”

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