Paywall. A few articles may be free if keywords are searched with Google.
https://www.ft.com/content/82d7919d-16c7-4354-92bb-dcbf774a7…
Alibaba will apply for a dual-primary listing on Hong Kong’s stock exchange, in a move analysts say lays the groundwork to grant mainland Chinese investors access to its shares and help minimise disruption if US regulators force it to delist from Wall Street.
The primarily listing requires certain audit, filing requirements to be fulfilled to meet the exchange’s requirement. Dual listing means BABA has to comply with two exchanges requirements, it increases their compliance costs. So why they are doing it? To provide access to mainland Chinese investors? NO.
The main reason BABA is doing this is, there is a real thread that they could be de-listed from NYSE. The timeline which looked like it is a 2024 risk is being moved by US legislators. They wanted to kick all Chinese firms by 2023.
Another lesson for countries around the world. West and USA uses their financial institutions to wage proxy war. Certainly firms in China or other countries will lose an opportunity to raise capital in the west, short-term there might be some impact in the long-run US, and West investors are the ones who will lose access to these companies.
US and West for decades talked about globalization, at least movement of goods, products & some services (except the ones provided by labor, they don’t want people to move). Now they are slowly moving towards isolationism.
What would be the impact on present holders of BABA ADRs were they to be delisted?
“What would be the impact on present holders of BABA ADRs were they to be delisted?”
I think the ADRs will become OTC pink sheet, so you can still trade it. Because it’s also listed in HK, you can call your broker anytime to convert to HK shares. This also means the pink sheet price will be tracking the HK share exactly - just like the tencent stock.
I think it’s possible there will be some selling from US funds that can only invest in US listed stocks, but those funds usually won’t be invested in ADRs anyway. The biggest ETF that own Baba is Kweb, which probably will switch to HK listed share if ADR is delisted.
And according to SEC’s website, BABA is not even on the lists of the companies that SEC threatened (JD and Pinduoduo are).
impo, delisting is not a big deal. The bigger risk is Chinese govt regulation, which seems to be getting better lately. Baba’s new CEO is playing good citizen, which helps.
Also, the new annual report of Baba just released. It seems the Tsai/Ma LLC only sold a tiny amount of their shares(something like less than 1% of their holdings). The shares outstanding reduced by 2.5% which is a little disappointing to me (maybe that’s due to the exercise of stock options by laid off employees?) They did doubled the share repurchases in March, and still have $15b buybacks to do (they probably bought another $1-2b since end of march). The HK dual listing might lead them to buy back shares in HK directly, which makes sense because their cash flow is RMB.
The HK dual listing might lead them to buy back shares in HK directly, which makes sense because their cash flow is RMB.
I assumed they are quoted in Hong Kong Dollars, aren’t they? So they still would need to convert from RMB.
HKD used to be pegged to the USD (more or less).
The real impact to the investors are the listing standards the exchange enforces. Other parts of the worlds are catching up, but Nasdaq, NYSE, London have well established compliance, governance requirements, which protects investors.
If it get de-listed from US, that means automatic sell for me. There are many fishes in the pond.
I assumed they are quoted in Hong Kong Dollars, aren’t they? So they still would need to convert from RMB.
That’s not such a big deal. It would be only one time on sale.
The bigger deal would be whether the share owner has a brokerage that lets you hold and trade something listed in Hong Kong.
For most people OTC would make more sense.
Jim