BABASheep
2022-03-25

$Alibaba(BABA)$The topic of delisting had surfaced again. This time, a report that the PCAOB (SEC) refuted that an agreement with CSRC with regards to Audit is "Premature". So they can still act to delist ADRs if they cannot satisfy HFCAA standards 3 years in a row. (Yes, copied from Baseball).

For the 6 Chinese ADRs in the warning list, the deadline will be 2024. All 249 Chinese ADRs will be on that list after their Q4 Final report. This problem had been around for about 20 years. 

To me, the risk Of delisting is about 10%. HFCAA came about during Trump's administration. A lot of it was due to Geopolitical tension of Tariffs. Of course, there was also Ruixing and Luckin Coffee which provided the ammo but the US have their Enron too.

Mr Liu He had already optimistically said that the CSRC is in constant communication and he is optimistic about arriving at a compromise soon. I'll take his word against any News Agencies's report anyday. We are all experienced investors.

The CSRC is not in an disadvantaged position at all. The US investors are already too deeply entrenched for 20 years in ADRs. Forcefully delisting 249 Chinese ADRs? You can imagine the implications in a capitalistic society And China's reactions. The US economy is already choppy, they don't need more on the plate.

The question of FACE. If push comes to shove, China owns $1.05 Trillion of US debts. Mr. Liu He is to be respected during the negotiations. Chinese saying, killing 1000 but sustaining 800 casualties. 

So, in conclusion, a compromise is a win-win for all parties. The NYSE and SEC gets their reputation and the ADRs get their fundings. We, small investors get rich, of course.


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Comments

  • Upswing118
    2022-03-26
    Upswing118
    Long term is still great. They've many biz or subsegment untapped yet.
    Looking fwd to those.
    I'm keeping this as most of the naysayers are fr you know where😡
  • Downton
    2022-03-26
    Downton
    With the Geopolitical situation these days, anything can happen. No longer the rational America we are used to.
    • BABASheep: 
      History shown that Politics is about money, Money is about politics. No eternal enemies, only eternal benefits.
  • feelond
    2022-03-25
    feelond
    since the government have confirmed support for all Chinese stocks trading in the USA, and requested them to follow regulation in order to continue trading properly on the stock exchange in the United States.
    • YTGIRLReplyBABASheep: 
      Definitely you are right about this, the fact VIEs to go ahead with their approval means everything.
    • BABASheep: 
      I’m sure CSRC is confident of a settlement. That’s why they allow VIEs to go ahead with their approval.
  • RKT
    2022-03-25
    RKT
    Delisting may be a possibility and threat is still hanging unless governments settle their issues at the highest level. The chances are it will happen and the question is when!!
    • BABASheep: 
      Boy chase girl. Girl snubs boy. Boy did great, finally won her heart and then Boy cruelly dumped her and went home.
  • Humbly
    2022-03-26
    Humbly
    Given the Alibaba is dual listed in HK and US, international investors can just goto HK to buy their shares without concerns about withholding taxes. Other Chinese listed ADRs can do the same.
    • BABASheepReplyBABASheep: 
      Too much implications, thus my confidence ADRs will not be forcefully delisted.
    • BABASheep: 
      True. The problem is that of Pension funds and other US Govt funds that cannot own overseas stocks. They will have to sell out thus affecting the stock if delisted. They will have to sell at a low.
  • Moonshot
    2022-03-25
    Moonshot
    Having 1.05 trillion of debt is not an advantage but a nightmare. US will be laughing at China for holding something that they can devalue or freeze on asset at any time. Russia is the best example.
    • BABASheep: 
      Yes, those were in part because of China’s trade surpluses. China sells the debt treasuries will trigger a bond market collapse, US interest rate will hit the roof. China will suffer from strong Yuan
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