By
Chimamanda U. Martha
October 10th, 2023
This move to list in Hong Kong comes as a response to the growing regulatory risks for Chinese companies listed in New York.
An announcement by Chinese electric car start-up Nio has revealed that the company’s shares will start trading on Hong Kong stock exchanges by March 10.
CNBC reported that this new Nio listing in Hong Kong will not undergo new fundraising and will not issue new shares. However, it will only be listed through the listing by a “way of introduction.”
In this kind of listing, the company will make a portion of existing shares available for trading in Hong Kong rather than fundraising or issuing new shares.
According to a filing with the Hong Kong Stock exchange, the Nio shares will trade under the ticker “9866”, starting from early March, precisely next Thursday.
A revelation by the company shows it will also trade on the Singapore Stock Exchange through listing by “way of introduction.” The company disclosed it aims to make shares on the two exchangeable.
This move to list in Hong Kong comes as a response to the growing regulatory risks for Chinese companies listed in New York.
It is no longer news that Washington intends to reduce US investors’ exposure to businesses that are not compliant with its audit checks. US-listed Chinese companies risk this as Beijing does not allow such scrutiny on their businesses for the risk of releasing “classified information.”
However, this does not mean that Beijing’s regulations are also straightforward. The country recently looked to tighten the screw with the introduction of the Cyberspace Administration of China rule.
The new rule compulsorily requires “network platform operators” with personal data and massive users (above 1 million) to undergo a cybersecurity check.
Nio will be subject to this rule, and it is uncertain as to how much it will affect the listings. However, the company’s PRC legal advisor (Han Kun Law Offices) said that the Cybersecurity Review Measures will not have a material adverse effect on our business financial condition, operating results and prospects.
It should be noted that the company also revealed that it already qualifies “for Grade III of China’s Administrative Measures for the Graded Protection of Information Security.”
According to the head of digital trade at the World Economic Forum, Ziyang Fan, this is a fairly high standard for the company.
Nio’s stock was valued at $33.31 billion as of Friday. The company’s stock has risen by over 200% over the past years and once traded for as high as $6.26 per unit at its IPO in 2018. However, its value plunged to around $1 in 2019 before it later soared due to capital injection.