US SEC added more Chinese firms including Alibaba to watch list facing delisting risks
US SEC added more Chinese firms including Alibaba to watch list facing delisting risks

US SEC added more Chinese firms including Alibaba to watch list facing delisting risks

 

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The US Securities and Exchange Commission (SEC) on Friday added Chinese e-commerce giant, the largest US-listed Chinese company, to a growing list of companies that may face delisting from US exchanges because of Beijing’s refusal to permit American officials to review their auditors’ work.

Under a 2020 law, the Holding Foreign Companies Accountable Act (HFCAA), foreign companies may be delisted if they fail to submit their audit papers to a US accounting oversight body for three consecutive years. This means the three-year countdown for Alibaba to comply with the requirement has started.

Alibaba’s shares were down 11% at $89.37 at the closing bell, ending the month 21.4% lower. The company’s shares were already feeling the pressure after reports suggested Jack Ma was planning to cede control of financial technology firm Ant, an affiliate of Alibaba.

Alibaba had said on Tuesday that it would apply for a primary listing in Hong Kong and expects the listing to be completed by the end of 2022, making it a dual primary listed company on the Hong Kong Stock Exchange and the New York Stock Exchange.

Alibaba CEO Daniel Zhang said in a statement that the company would pursue the dual listing to foster a “wider and more diversified investor base.” “Hong Kong is also the launch pad for Alibaba’s globalization strategy, and we are fully confident in China’s economy and future,” Zhang said.

Others added to the list on Friday include Mogu Inc. Boqii Holding Limited, Cheetah Mobile Inc and Highway Holdings Limited.

More than 150 Chinese companies are now on the SEC’s provisional line-up of firms to be delisted, including JD.com, Pinduoduo, Bilibili and Nio. There were 261 Chinese companies, with a total valuation of $1.3 trillion, listed on major US stock exchanges at the end of March, according to a report by the US-China Economic and Security Review Commission.