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Escaping Nasdaq – Chinese High-Tech Heavy-Weights Prepare Plan B

Well-known Chinese news site Sina recently reported that, with the recent success of Chinese high-tech leader Alibaba going public on the Hong Kong Stock Exchange (HKSE) for the second time, key Chinese high-tech companies are coming up with Plan B to face the high probability of being kicked out of the U.S. stock markets, mainly Nasdaq. Luckin Coffee’s latest scandal story about accounting fraud served as the last straw that pushed U.S. senators to propose regulations to delist Chinese companies traded on U.S. stock exchanges, due to their lack of transparency. The Chinese search engine leader Baidu (Nasdaq listed since 2005), though it denied it publicly, is actively preparing to withdraw from the U.S. market for the HKSE. Jing Dong (, NetEase and CTrip are all looking at IPOs or re-IPOs in Hong Kong. The planning even started in January. Nasdaq has been strengthening its restrictions on reporting requirements for foreign companies, especially audit requirements to align with international accounting standards. The U.S. Senate’s recent passage of the Holding Foreign Companies Accountable Act sent a very strong signal to drive Chinese companies out of all U.S. stock markets, though China’s name was not mentioned. Currently there are around 200 companies that this new act may impact if it also passes the House.

Source: Sina, May 22, 2020