A few months ago, China’s government and the vice premier said that it would co-operate with U.S. regulators to keep Chinese firms listed. Last week, Alibaba (BABA) and Kingsoft (KC) applied for Hong Kong dual listing. Last Friday, July 29, 2022, the SEC said delisting is a possibility.
The U.S. toughened its stance against China. Despite President Biden and Xi discussing trade, tariffs, and other matters by phone, the U.S. SEC placed Alibaba on a list of companies at risk of delisting. For years, Chinese tech companies like Baidu (BIDU), Bilibili (BILI), and JD.com (JD) did not need to give U.S. regulators review access to their auditors’ work. This is a major issue.
The U.S. law gives those companies three years to comply. If it fails to do so, it risks delisting.
Alibaba will post quarterly results on Thursday, August 4, 2022. After major cities like Shanghai and Beijing locked down for two months, expect Alibaba to post unusually weak revenue.
Investors cannot resist the low valuations of BABA stock and that of other firms. Those stocks are cheap because political risks are higher than ever. The U.S. and China trade war started during the Trump era. It continues to hurt trade relations between the two countries.
