- The Securities and Exchange Commission (SEC) has threatened Chinese firms like Nio (NIO) with delisting.
- NIO stock is now tradable in Singapore.
- Expanded access could allay investors’ concerns about Nio’s shares.
Shares of Chinese tech firms have been brutalized lately. One such casualty is the electric vehicle (EV) manufacturer Nio (NASDAQ:NIO). The company saw its share price drop from $33 at the start of the year to its current price of about $15.
There have been many headwinds facing NIO stock from continued supply chain concerns and inflation. However, one narrative that has been putting downward pressure on Chinese stocks is the threat of delisting from major U.S. exchanges. This latest news puts at least some of that concern to rest.
| NIO | Nio | $14.53 |
Nio Makes its Singapore Debut
In a recent bit of good news, Nio completed its listing on the Singaporean stock exchange. Given that the company is listed in both New York and Hong Kong, this makes it the third exchange where investors can trade NIO stock.
The shares that trade on all three exchanges are identical and theoretically should be at the same price. There could be some arbitrage opportunities between the exchanges. However, this isn’t typically something retail investors should concern themselves with.
According to Nio founder William Li, “Today marks a new milestone for NIO. The listing on the SGX is of great importance to NIO’s global business development. NIO has further strengthened its footing in the global capital markets.” Singapore is an important capital markets hub for Asia.
Apart from listing on the stock exchange, Nio is also establishing a research and development (R&D) center for autonomous driving and artificial intelligence (AI) in the country.
Singapore Trading Alleviates Delisting Risk
The listing in Singapore potentially removes or at least alleviates one of the overhangs on NIO stock. As the geopolitical tensions continue to play out between Washington and Beijing, some major Chinese firms are at threat of being delisted from U.S. exchanges.
The major sticking point is disclosure regulations recently pushed by the Securities and Exchange Commission (SEC) and Congress. Chinese companies listed on American exchanges are required to open their books to U.S. regulators for audit purposes.
Beijing has denied this request and for the longest time, Washington historically just let it slide. That no longer appears to be the case.
Nio listing on multiple exchanges somewhat alleviates the threat by making its shares tradable. While a great deal of capital still mostly flows through American exchanges, most modern brokers allow trading on foreign exchanges. This would allow at least some access to NIO stock.
The Takeaway on NIO Stock
NIO stock listing on an alternative exchange, and thus making it more accessible, should alleviate some of investors’ concerns. This could spark the impetus of Nio being assessed based on its own value without the discount associated with delisting. While a bottom has not been confirmed yet, NIO stock could potentially rally from these price levels.
On the date of publication, Joseph Nograles held a long position in NIO stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
