(Yicai Global) Aug. 1 — Alibaba Group Holding’s Hong Kong-traded shares fell today after the Chinese internet giant said it will do what it takes to remain listed both in New York and Hong Kong. Last week, the US securities regulator added the firm to a delisting watchlist, giving it a three-year window to conform to US auditing regulations or be booted from the exchange.
Alibaba’s Hong Kong shares [HKG:9988] closed down 3.7 percent at HKD89.65 (USD11.50). On July 29, its US stock [NYSE:BABA] plunged 11.1 percent to end the week at USD89.37.
Alibaba will continue to monitor the market and to comply with applicable laws and regulations, the Hangzhou-based company said today.
The US Securities and Exchange Commission placed Alibaba on a delisting watchlist for non-compliance with the Holding Foreign Companies Accountable Act on July 29, where it joins 159 other US-traded Chinese firms, including internet giant Baidu and short video site Bilibili. The Act, which was passed by the Trump administration in late 2020, requires all foreign firms listed on US bourses to, among other things, meet the Public Company Accounting Oversight Board’s accounting requirements.
Alibaba has 15 days to prove that there are no grounds for it to be removed from the exchange otherwise the internet giant will be transferred to the formal ‘delist’ list, after which, if it fails to pass the PCAOB review for three consecutive years, it will be prohibited from trading on any US bourse or over-the-counter market.
The ruling has put many companies off from choosing the US as an overseas listing destination as the sharing of company accounts abroad contravenes China’s own data security regulations.
Sensing trouble brewing, Alibaba applied to the Hong Kong bourse for dual primary listing status last week. By elevating its current secondary listing status to primary, the firm will gain access to mainland investors through the Hong Kong stock connect programs. It will also spread the risk, as a secondary listing is affected by any changes to the primary listing.
So far, the Hong Kong listing has not provided Alibaba with as much liquidity as the US market. In the six months ended June 30, there was a daily average of USD700 million traded on the Hong Kong bourse compared with USD3.2 billion in New York.
Editor: Kim Taylor