Chinese e-commerce giant Alibaba was one of 100 companies that had faced the risk of delisting in the US in 2024 if their audit information was not made available to PCAOB inspectors.
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Investors could regain the confidence to put their money in Chinese technology stocks as these companies avoid delisting from US stock exchanges and the Chinese government promises policy support, according to one investment manager.
Last week, the US accounting watchdog, the Public Company Accounting Oversight Board, said it had been given full access to audit and investigate Chinese companies for the first time, after China gave the US access to the end in August.
More than 100 Chinese technology companies such as Alibaba, Baidu and JD.com had faced the risk of delisting in the US in 2024 if their audit information was not available to PCAOB inspectors.
Investors often grapple with a lack of transparency for Chinese stocks.
“It will allow institutional investors to come back. Professional investors were very scared of this delisting risk and that’s why they stayed on the sidelines,” said Brendan Ahern, chief investment officer at US investment manager , KraneShares, told CNBC’s “Squawk Box Asia” on Wednesday.
As of September 30, there were 262 Chinese companies listed on US exchanges with a total market capitalization of $775 billion, according to the US-China Economic and Security Review Commission.
“With that risk going away based on the PCAOB announcement, you’re going to see investment dollars flow back to these names,” Ahern said.
“These internet giants are really where investors want to invest when it comes to China,” Ahern said.
But he also warned that it is still “early days, weeks, months to see that capital return back to space.”
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But he also noted that policy support will help boost the growth of these companies. Read also : Sports Betting in California: Fact Check. Last week, China pledged to increase domestic consumption next year, as the country moves to boost growth after abandoning its no-Covid policy.
“2023 is a year where we’re going to have a lot of government policy support like increasing domestic consumption,” Ahern said. “About 25% of all retail sales go through the companies.”
“The Chinese government really needs these internet companies, which explains why we’ve seen support for some of the regulatory scrutiny we experienced in 2021,” Ahern said.
Which Chinese companies are getting delisted?
China Telecom (0728.HK), China Mobile (0941.HK) and China Unicom (0762.HK) were delisted from the United States in 2021 after a Trump-era decision to limit investment in technology companies Chinese.
Which Chinese stocks will be delisted? Five major Chinese companies, including China Life Insurance Company, PetroChina Company Limited, China Petroleum & Chemical Corporation, Aluminum Corporation of China Limited, and Sinopec Shanghai Petrochemical Company Limited, recently indicated that they will voluntarily delist from the York Stock Exchange New (NYSE). To see also : US Air Force Secretary: China’s actions around Taiwan increase risk.
How many Chinese companies have been delisted?
Five Chinese state-owned companies, including the country’s leading energy and chemicals company, have opted to delist from the New York Stock Exchange by the end of August. Read also : Are the US and China waging a “tech war” over semiconductors and other advanced technology?.
Which 5 Chinese companies will be delisted?
Five Chinese companies listed on the New York Stock Exchange said they plan to write off their American depositary shares. The companies include China Life Insurance, PetroChina, China Petroleum & Chemical, Aluminum Corp. of China and Sinopec Shanghai Petrochemical.
What happens if I dont sell delisted shares?
Shareholders retain their legal rights and equity interest in delisted stock even if they cannot sell their share as easily as before.
What happens if you hold an unlisted stock? What Happens to Shares When a Stock is Delisted? If a stock is delisted, shares may continue to trade over the counter on the OTC bulletin board (or possibly on an overseas market). Shareholders can continue to trade the stock, although the market is likely to be less liquid.
Do you lose money on a delisted stock?
You don’t automatically lose money as an investor, but being delisted carries a stigma and is generally a sign that a company is bankrupt, near-bankrupt, or unable to meet the exchange’s basic financial requirements for other reasons. Delisting also tends to discourage institutional investors from continuing to invest.
Should I sell my delisted stock?
Although delisting does not affect your ownership, shares may hold no value after delisting. Therefore, if any of the stocks you own are delisted, it is best to sell your shares. You can either exit the market or sell it to the company when it announces a buyback.
What does it mean to delist from the SEC?
Delisting is the removal of a listed security from a stock exchange. Delisting a security can be voluntary or involuntary and usually occurs when a company ceases operations, declares bankruptcy, merges, fails to meet listing requirements, or attempts to go private.
Can the SEC delist a stock? In general, the federal securities laws allow the SEC to suspend trading in any stock for up to ten business days.
What are the benefits of delisting?
As a result, deregistration can save a company millions and reward shareholders with higher net income and earnings per share (EPS). Strategic Move – A company’s shares may be trading below intrinsic value, forcing the company to acquire its own shares as a strategic move.
What happens to my money if a share is delisted?
Delisting does not directly affect shareholder rights or claims on the listed company. However, it will often drive down the share price and make it harder to sell holdings, even as thousands of securities trade over the counter.
