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Bilibili is underperforming in its secondary listing. The company dabbed China’s YouTube last week raised $2.6 billion in its Hong Kong listing, in its first day of trading, it opened below its IPO price and dropped as much as 7% intraday.
Amidst concerns about US-China tensions, companies are employing contingent measures. Bilibili joins Alibaba, Baidu and JD.Com in the row of the US-listed Chinese companies that have conducted a second listing. The four companies have listed in the Hong Kong exchange with concerns that the tensions between Beijing and Washington could result in their delisting in the US.
Bilibili opening price on Monday was disappointing, further worsening within the day. The firm last week set its target at 808 Hong Kong dollars (around $103) per share. After just a week, the shares opened 790 Hong Kong dollars (around $101) a 2.2% drop that handed investors an instant loss on the first day of trading. In intraday trading, prices dropped as low as 753 Hong Kong dollars marking a nearly 7% fall.
Bilibili CEO Focuses on Long Term Plan after Secondary Listing
Bilibili chief executive officer Chen Rui cited the recent new US law seeking foreign companies to open their books as the reason for the Chinese tech shares slump. But the CEO is adamant that the shares will rebound and no one will remember this flop in ten years. He further noted that the company is not interested in short-term performances. With its shares up by over 300% in the last year, his case is valid. As a streaming platform, gaming and virtual gifts seller, the lockdown has been a major boost with its services increasingly demanded.
It is generally expected that shares don’t perform exceptionally in their second listing. And particularly with tensions high, most international investors are staying away from Chinese stock exacerbating Bilibili’s case.
Chinese Stocks Under Threat
The US SEC is widening its regulatory scope. A new law forces listed companies to grant access to their books. It further grants authorities to delist companies that do not abide by the new rules. This has rattled a number of Chinese companies listed in the US. These companies are already aware that the Biden administration is already in a political crash course with China and could be targeting them with the new rules.
As a contingency plan, they are heading ‘home’. But as the US-listed stocks underperform and international investors shun Chinese stock, their reception in Asia has fallen short.
For the majority of these companies, including Bilibili, their performance over the last few years has been positive. Their long-term outlook is equally promising. The current slump is an investor reaction to political uncertainty, a situation that almost always autocorrects in the mid to long term.