Alibaba shares in Hong Kong fall after US delisting threat

Alibaba (WOMAN) on Monday morning in Hong Kong, it fell by 6%, but then cut the loss to 3.8% in the afternoon.
U.S.-listed Alibaba shares fell 11% on Friday after the Securities and Exchange Commission placed the company at his watchlist.
Investors have been worried about the tech giant for years. In late 2020, Alibaba became embroiled in a massive crackdown in China targeting the country’s booming tech sector. Shares are down nearly 70% from their all-time high.
The crackdown, coupled with a weakening economy, has slowed many tech companies’ earnings growth and wiped out billions of dollars in Chinese companies’ market capitalization.

The Securities and Exchange Commission has the power to kick companies off Wall Street if they fail to allow U.S. regulators to review their financial audits for three consecutive years.

China has for years refused to have its firms audited by the US, citing national security concerns. It requires companies that trade overseas to keep their audit documents in mainland China, where they cannot be verified by foreign agencies.
The SEC has added over 150 companies to the list so far. his watchlistincluding Didi, JD.com (JD), Baidu (BIDU)as well as Yum China Holdings (YMC).

On Monday, Alibaba said it would monitor market developments and “strive to maintain its listing status on both the NYSE and the Hong Kong Stock Exchange.”

The company announced last week that it would seek an initial listing on the Hong Kong Stock Exchange, in what many analysts see as preparation for a potential loss of direct access to the US capital market.

Alibaba currently has a secondary listing on the Hong Kong Stock Exchange.

“Hong Kong’s primary listing status gives Chinese ADRs (American Depositary Shares) the opportunity to diversify listing risk and retain access to the public stock market” if they are forced to leave the United States, analysts at Goldman Sachs said in a recent report. a week.

Alibaba’s smooth transition from listing status could also “pave the way” for many other Chinese ADRs to make a similar transition, Citi analysts said.

– Julia Horowitz of CNN Business contributed to this report.

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