Alibaba (BABA) shares tumbled 6% in Hong Kong on Monday morning but trimmed losses to 3.8% in the afternoon. On Friday, US-listed Alibaba shares fell 11% after the Securities and Exchange Commission put the company on its watch list.
Investors have been worried about the tech giant for years. In late 2020, Alibaba was caught up in a wide-ranging crackdown in China on the country’s growing tech sector. The shares are down nearly 70% from their all-time high.
The crackdown, along with a weakening economy, has slowed revenue growth for many tech companies and wiped billions of dollars off the market value of Chinese companies. The SEC has the power to kick companies off Wall Street if they don’t allow US watchdogs to inspect their financial audits for three consecutive years.
China has for years rejected US audits of its companies, citing national security concerns. It requires foreign-traded companies to keep their audit documents in mainland China, where they cannot be scrutinized by foreign agencies.
So far, the SEC has added more than 150 companies to its watch list, including Didi, JD.com (JD), Baidu (BIDU) and Yum China Holdings (YUMC). On Monday, Alibaba said it would monitor market developments and “would strive to maintain its listing status on the NYSE and the Hong Kong Stock Exchange“.
Last week, the company announced that it would seek a primary listing on the Hong Kong Stock Exchange, a move seen by many analysts as preparation for a potential loss of direct access to the US capital markets. “A primary listing status in Hong Kong gives Chinese ADRs (American Depository Shares) an option to diversify their listing risk and maintain access to the public stock market” if they are forced to leave the United States, Goldman Sachs analysts said in a previous report. week.
Alibaba’s smooth transition of listing status could also “set the path” for many other Chinese ADRs to pursue a similar change, analysts at Citi separately said.
This article is an article written by Laura He to the website CNN Business.
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