[ad_1]
Alibaba (BABA) – Get the report from Alibaba Group Holding Ltd. is back in the spotlight after intense stock price volatility. The stock recently skyrocketed after Alibaba management presented a growth plan during the recent Investor Day.
However, since Beijing’s latest regulatory measures pushed Chinese stocks to the point of delisting from US markets, shares of companies including (BABA) – Get the report from Alibaba Group Holding Ltd., Nio (NIO) – NIO Inc. (China) report received, JD.com (JD) – Get JD.com Inc. Report, and Baidu (GET STARTED) – Get Baidu Inc. Report — have fallen in recent weeks.
If Alibaba — or any other Chinese company — delists from US stock exchanges, here’s what you need to know.
The removal scenario
After years of holding the reins of Chinese companies that list on the American stock exchanges, Beijing has changed course.
Chinese regulators are especially concerned about the US Securities and Exchange Commission’s requirement that listed companies share data with the agency and allow it to conduct audits of their companies.
didic (DIDI) – Get the DiDi Global Inc. report, one of several giant Chinese companies to enter the US stock market in 2021, filed for delisting from the NYSE just six months after its initial public offering (IPO). The main reason was the dissatisfaction of Chinese regulators with the decision to list DIDI in the US without a clear solution to cybersecurity threats and data breaches.
The same could potentially extend to other major Chinese internet companies such as Alibaba, JD.com and Baidu, which have already run double listings on the Hong Kong Stock Exchange.
It is worth remembering that this scenario is nothing new. The tense regulatory dispute between China and the US has been going on for decades. However, little progress has been made so far to calm the minds of both sides.
What happens if a share is delisted?
When delisting, the share will no longer be listed on the stock market. In the case of Alibaba, it would not be traded on the New York Stock Exchange (NYSE).
The delisted stock can still be traded over-the-counter (OTC), meaning it trades on a decentralized market.
However, when a stock is delisted, institutional investors tend to exit it. It is also losing its wide access to buyers, sellers and intermediaries. This can lead to less liquidity and a drop in the company’s share price.
Our Take
Pressure from Beijing to delist not only poses a huge risk to these companies, but also a huge risk to the Chinese economy itself.
The Chinese economy would likely suffer from a reduction in capital inflows. Closing the doors to foreign capital is usually never a wise decision. It would be a signal that Chinese companies may not be investable.
(Disclaimers: This is not investment advice. The author may list one or more stocks in this report as long. The article may also contain affiliate links. These partnerships do not affect editorial content. Thanks for supporting the Wall Street Memes)
|
Sources 2/ https://www.thestreet.com/memestocks/other-memes/what-happens-alibaba-stock-delisted-us-market The mention sources can contact us to remove/changing this article |
[ad_2]