Alibaba Seeks to Maintain Its Place on the New York Stock Exchange List

Alibaba Group Holding Ltd said on Monday it will work to maintain its Hong Kong listing as well as its New York Stock Exchange listing after the Chinese e-commerce giant was placed on a delisting and watch list by US authorities.

Alibaba (NYSE:BABA) shares closed down about 3.8% in the almost flat Hong Kong market, following an 11.1% drop in New York on Friday. The company on Friday became the latest of more than 270 firms added to the US Securities and Exchange Commission's list of Chinese companies that could be delisted for failing to meet regulatory requirements. The Holding Foreign Companies Accountable Act (HFCAA) aims to address a long-running dispute over the audit compliance of Chinese firms listed in the US. The law aims to remove foreign companies that fail to comply with American auditing standards for three consecutive years from US stock exchanges. Alibaba said on Monday that its addition to the list meant it was now in its first 'non-audit' year. "Alibaba will continue to monitor market developments, comply with applicable laws and regulations, and strive to maintain its listing status on both the NYSE and the Hong Kong Stock Exchange," the Hong Kong stock exchange said in a statement. US regulators are demanding full access to audit work papers of Chinese companies listed in New York that are stored in China. Beijing prohibits foreign scrutiny of the work papers of local accounting firms. US rules give Chinese companies until early 2024 to comply with audit requirements, but Congress is considering bipartisan legislation that could accelerate the deadline to 2023. China has said both sides are committed to reaching an agreement to resolve the supervision dispute. Alibaba said last week it plans to apply to convert its secondary listing in Hong Kong to a dual primary listing, which would make it easier for mainland Chinese investors to buy its shares. The dual listing would allow Alibaba to apply for admission to Stock Connect, which links Hong Kong and mainland exchanges. Analysts estimate that there could be inflows worth $21 billion into Alibaba shares from mainland investors through Stock Connect. Alibaba's Hong Kong-listed shares fell 49% to HK$90.15 on Monday from HK$176 at the time of its secondary listing in November 2019. Its shares in New York were listed at $68 in 2014 and are currently trading at $89.37. Both sets of listed shares have fallen about 25% so far this year as the company struggles with the threat of delisting, ongoing Chinese tech regulations and the possibility that founder Jack Ma may cede control of the firm's subsidiary Ant Group. Analysts at Jefferies described the fall in Alibaba's share price as a "knee-jerk reaction" to news of a potential delisting, adding that the 2024 deadline set for the delisting of Chinese American Depositary Receipts gives China enough time to resolve its supervisory issues. It was said: "China is serious about resolving supervisory issues with the US and talks will continue."