Why the SEC ditches Alibaba
Alibaba sells 3% on the Hong Kong Stock Exchange after threat of delisting in 2024 by the Sec. The Chinese tech giant says it will strive to maintain the listing in New York
The stock of the Chinese e-commerce giant Alibaba collapses (-3%) in the Hong Kong market.
Shares of Alibaba fell as much as 5.1% in early trading in Hong Kong late Sunday night, while losses have now narrowed to around 3%. US shares plunged more than 11% on Friday after the US Securities and Exchange Commission (SEC) added Alibaba to a list of more than 250 Chinese companies that could be delisted on Wall Street due to non-compliance with the requirements. financial audit.
Alibaba will "strive" to maintain the New York listing despite the addition to the SEC watchlist, the company said Monday in a statement to the Hong Kong Stock Exchange.
The news comes in a context of tensions between Washington and Beijing on a range of issues, from technology to human rights in Taiwan, Radiocor points out.
Meanwhile, the Wall Street Journal also reported Friday that Alibaba co-founder Jack Ma is preparing to relinquish control of Ant Group, the 33% Alibaba-owned fintech firm .
All the details.
THE DECISION OF THE SEC
The US financial markets control body has decided to place Alibaba on a list of more than 250 companies that could be expelled from Wall Street if they fail to meet strict audit criteria for three consecutive years.
US regulators have requested full access to the audit working documents of New York-listed Chinese companies filed in China.
WHAT THE HOLDING FOREIGN COMPANIES ACCOUNTABLE ACT INCLUDES
Following the introduction of the Holding Foreign Companies Accountable Act in 2020, regulators can ban trade in foreign companies in the United States if they are unable to inspect audits for three consecutive years.
The legislation aims to remove foreign companies from US exchanges if they fail to meet US auditing standards, Reuters points out.
THE BEIJING ATTITUDE
"China has prevented its companies and accountants from providing foreign regulators with access to audit files, despite US laws requiring them to be inspected every three years," the Financial Times explains.
THE POSITION OF THE CHINESE COLOSSUS
But Alibaba intends to stay on Wall Street.
The company said it "will seek to maintain its listing status on both the NYSE and the Hong Kong Stock Exchange." But the Chinese giant did not explain how it could maintain its listing in the United States.
The fate of Alibaba's listing in New York will in fact depend on an agreement between Beijing and Washington for China to allow the United States to access the audit files.
THE COMMENT OF THE ANALYSTS
The drop in Alibaba's share price is a "knee-jerk reaction" to news of a potential delisting, Jefferies analysts reported by Reuters . According to analysts, the 2024 deadline for removing American Chinese deposit receipts gives China enough time to resolve its audit problems.
"China is serious about resolving the audit problems with the United States and the talks will continue," the Jefferies note read.
DOWN THE SHARES OF ALIBABA
Meanwhile, Alibaba's stock fell 27% from a July high, after climbing 70% from its record low in March.
Last week, the Chinese tech giant said it will apply for a double primary listing in Hong Kong while retaining the NYSE one. Alibaba's shares already trade on the US and Hong Kong stock exchanges, but the current listing in Hong Kong is secondary.
The main listing process in Hong Kong is expected to be completed by the end of 2022, the company said in a statement.
Meanwhile, the tech giant Jack Ma founded in China faced an antitrust investigation and a $ 2.8 billion fine last year.
MA'S MANEUVERS ON ANT GROUP
In recent times, founder Jack Ma has almost disappeared from public view. And now it is now planning to relinquish control of Alibaba's subsidiary Ant Group, according to the Journal .
For over a year, Ant Group has been in the sights of Beijing's market regulators. In 2020, the Chinese authorities blocked in extremis the initial public offer (IPO) of more than 34 billion dollars that should have taken the company on the Shenzhen and Hong Kong stock exchanges.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-la-sec-affossa-alibaba/ on Mon, 01 Aug 2022 10:06:34 +0000.