There has been recent concern that the SEC (Securities and Exchange Commission) is on the verge of delisting Chinese companies that refused to provide required audit report information. With the increasing fear of these companies being removed from the publicly traded stock market, we saw their price per share take a hit. Investors have been skeptical of the Chinese companies since there is uncertainty on whether they would meet the SEC’s requirements to remain listed the exchange. However, that fear lightly subsided when news broke today that Beijing regulators were working to give the United States the requested audits necessary to keep them publicly listed on the NYSE. The Chinese companies listed on the NYSE include but are not limited to Alibaba Group Holding ltd (BABA), Baidu Inc (BIDU), Pinduoduo (PDD), NetEase Inc (NTES) and JD.com (JD).
CHINESE COMPANIES PRICES JUMP
The China Securities Regulatory Commission along with other regulators are hopeful of creating a plan that would allow the majority of the Chinese companies to remain listed on the U.S Exchange. Though plans are still in the works and may be subject to change, this has currently subsided a little bit of the bearish investors fears and we saw spikes in the Chinese listed companies. Alibaba (BABA) jumped 1.3%, Baidu Inc (BIDU) increased 6.6% and Didi Global Inc increased 13%.
INCREASE IN CHINESE COMPANY BUY BACKS
In the last few weeks we also saw that Chinese companies are joining the trend of stock buybacks. What exactly is a share buyback? A “buyback” is when a company will repurchase a number of its own shares. In doing this, it reduces the number of shares that is available to the public and can help increase the price of the shares. Alibaba released that they will increase their stock buybacks from $15 billion to 25 billion. This is bullish news that will likely draw investors back in to the Chinese listed companies. Analysts anticipate that the buyback trend will continue in popularity, especially since Chinese Securities Regulatory Commission has been encouraging companies to participate in share buybacks.
With the recent bullish news, this could potentially put investors at ease and we could begin to see prices increase further as confidence grows that these companies will remain listed.