Delisting means a Chinese company traded on an exchange — like the Nasdaq or New York Stork Exchange — would lose access to a broad pool of buyers, sellers and intermediaries. Rising political pressure in the U.S. and China are increasing the chance that Chinese stocks listed in New York might be forced off exchanges there.
Full Answer
Are Chinese stocks still a good investment?
Jan 05, 2021 · Key Points. Rising tensions between the U.S. and China are increasing the chance that Chinese stocks listed in New York might be forced off exchanges there. Removal of a …
What are the best stocks in China?
Dec 10, 2021 · Delisting means a Chinese company traded on an exchange — like the Nasdaq or New York Stork Exchange — would lose access to a …
What is the delisting of Chinese ADRs means for investors?
Feb 07, 2022 · What often happens when a stock is delisted is the price crashes because institutional investors cannot hold shares. They sell out of their holdings and the stock falls. Since it’s still the same company though, that’s often a buying opportunity and it could be for these Chinese stocks as well.
Are Chinese tech stocks suddenly attractive again?
Feb 27, 2021 · This Jan. 13, the Trump administration announced that U.S. investors who have put money in the soon-to-be delisted Chinese firms have until November 2021 to trade their shares on the NYSE. At the ...
What will happen to Chinese stocks if delisted?
What will happen to my Alibaba stock if it is delisted?
What happens if a foreign stock is delisted?
Once a stock is delisted, stockholders still own the stock. However, a delisted stock often experiences significant or total devaluation. Therefore, even though a stockholder may still technically own the stock, they will likely experience a significant reduction in ownership.
Are Chinese stocks going to be delisted?
Do I lose my money if a stock is delisted?
Can a delisted stock come back?
What are the benefits of delisting?
Is SNDL getting delisted?
The Nasdaq gave Sundial this notice last August.Feb 9, 2022
Why are Chinese stocks down?
How many stocks get delisted?
Are China and Ukraine allies?
Political pressure on both sides
Amid rising tensions between the U.S. and China, former U.S. President Donald Trump took steps toward removing U.S. investment in Chinese companies, especially those deemed to have alleged ties to the Chinese military.
Delisting is not the end
Chinese stocks have been delisted from U.S. exchanges for reasons other than politics.
How long does it take for Chinese companies to comply with US regulations?
Lawmakers decided in May to give Chinese companies and their auditors three years to comply with US regulations.
Can you sell Hatch shares?
If they are delisted and moved to another market exchange like the OTC, they can still be sold through our US broker, but not through the Hatch site. Investors who own shares in this situation will need to contact our team ( [email protected]) and we will facilitate the sale with DriveWealth.
Is Luckin Coffee a fraud?
Luckin Coffee's recent troubles may have been the final straw that resulted in the proposed legislation. The Chinese coffee company announced in early April that an internal investigation found evidence of fraud in its financial statements. Trading of Luckin shares was halted in early April, and the Nasdaq is now preparing to delist the company.
The Delisting Scenario
After years of keeping a loose rein on Chinese companies listing on U.S. stock exchanges, Beijing has changed its tune.
What Happens If a Stock Is Delisted?
When delisted, the stock becomes no longer publicly listed on the stock market. In Alibaba's case, it wouldn't be traded on the New York Stock Exchange (NYSE).
Our Take
Not only does Beijing's delisting pressure present a gigantic risk for these companies, but it also poses a huge risk for the Chinese economy itself.
China wants Didi to delist over security concerns
China is concerned about the security of its citizens’ data. Not only is Didi listed in the U.S., but two of its biggest stockholders, Uber and SoftBank, are non-Chinese companies.
It's unclear what would happen to your Didi stock
Bloomberg first reported that China wants Didi to either list on Hong Kong, which is now fully part of China, or go private. If the company lists in Hong Kong, U.S. Didi investors would get its Hong Kong-listed shares. However, the Hong Kong listing may be at a lower price than its current U.S. price.
SoftBank could lose billions from the Didi fiasco
SoftBank, which is Didi's largest stockholder, would be the biggest loser in a delisting. So would Uber, which got a stake in Didi in exchange for selling its Chinese operations to the company. Uber has been facing tough competition outside the U.S. and has exited several other markets in Asia.
Other Chinese stocks might also fall
Chinese stocks tumbled amid the tech crackdown. Furthermore, just when fears of further Chinese crackdowns were abating, concerns of a slowdown in the world’s second-largest economy grew, exacerbated by Alibaba's tepid outlook during its Q2 2022 earnings release.
Xi Jinping might not care much
For Chinese president Xi Jinping, social stability and national security are a far bigger concern than Didi stockholders losing billions of dollars. The country has taken a hard turn toward the left, erasing the gains it has made over the last two decades. Didi’s delisting would also impact other Chinese companies seeking a U.S. listing.
What does it mean when a stock is delisted?
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 can't meet the exchange's minimum financial requirements for other reasons.
What happens to a delisted company?
What's more common than a relisting is that a delisted company goes bankrupt and the deliste d stock becomes worthless. The company may be acquired by a private owner out of bankruptcy or be forced to liquidate. The company may also restructure and eventually go public through an initial public offering (IPO), issuing new shares to new shareholders. While the company is the same, the original shareholders generally have their investment wiped out in the bankruptcy.
Why is it important to understand the delisting process?
Understanding the delisting process is helpful for gaining greater knowledge of stock market mechanics, but remember that most investors are better off avoiding delisted stocks since they risk losing everything in the event of a company declaring bankruptcy.
What is the name of the stock exchange that is listed on the stock market?
If you're like most investors, your stocks are listed by a major index such as the New York Stock Exchange (NYSE) or the Nasdaq ( NASDAQINDEX:^IXIC), which is both a stock exchange and a stock market index. In order to be listed on a stock exchange, a company must stay in compliance with certain rules set by the exchange. When they don't, they get delisted, or removed from the exchange. While delisting can be voluntary or involuntary, generally when investors talk about stocks delisting, they're referring to the involuntary kind initiated by an exchange.
How many shareholders does the Nasdaq have?
The Nasdaq has three primary requirements to stay in compliance: Share price of at least $1. A total of at least 400 shareholders. Shareholders' equity valued at $10 million or a market value of at least $50 million or total assets and total revenue of at least $50 million each.
What companies are going public after being delisted?
Some high-profile examples in the past decade of delisted companies restructuring and again going public are Eastman Kodak ( NYSE:KODK) and American Airlines ( NASDAQ:AAL). The shares now available from these companies are different from the ones that were originally delisted.
What happens when a company delists?
Companies can also delist themselves. That happens when they are taken private or merge with another publicly traded company. The company may move its stock to a different exchange or even dissolve, liquidating its own assets and paying out the proceeds to shareholders.
What happens if a stock is delisted?
If a stock is delisted, the company may still trade over two different platforms, namely: the Over-the-Counter Bulletin Board (OTCBB) or the pink sheets system. Although both are significantly less regulated than the major exchanges, OTCBB is by far the stricter of the two.
What could cause a stock to be delisted from an exchange?
Failure to continually comply with these edicts could cause a stock to be delisted from an exchange.
What are the requirements to sell stocks?
The mandates include share price minimums, certain shareholder thresholds, and fastidious documentation of a company's performance and operational data.
Why do stocks drop off radar?
As a result, individual investors have less data on which to base their investment decisions, often causing such stocks to drop off their radar screens. Not surprisingly, a delisted company's liquidity and trading volume typically plummet as a result.
What happens when a company delists from the stock market?
When a company delists from a major exchange, shareholders still legally own their shares, even if they're worthless in value. Generally speaking, delisting is regarded as a precursor to the act of declaring bankruptcy .
How much stock must a company hold?
For example, the New York Stock Exchange (NYSE) requires companies to maintain at least 1.1 million publicly-traded shares outstanding that must be minimally worth $100 million. Furthermore, if a company fails to file performance documents such as 10-Q s or 10-K s with the Securities and Exchange Commission (SEC), the exchange may choose to delist that company's stock. 1
What happens to preferred stockholders in bankruptcy?
If a delisted company enters bankruptcy, preferred stockholders are entitled to be paid from any liquidated assets before common stockholders may collect any money.
