Alibaba delisting what happens?

It’s looking increasingly likely that Alibaba stock will delist from the the US exchange as China seem to prefer HK. I really don’t want to sell the actual company, particularly at peak fear. Most brokers would just simply exchange to HK which is ISA compliant but I know that T212 currently do not have that feature? What would happen in a delisting situation and is the HK market still ‘coming soon’

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I think you missed this in the help section:

Thanks I’m new here sorry.

So OTC would be an immediate sale for anyone in an ISA.

And HK isn’t realistically going to be an option in the immediate future. Gotcha

Well with a lot of unknowns as the questions posed, it’s good to have some certainty. I don’t hold this directly, I like the company and long term agree it has a lot of potential, but I invest in a lot of Trusts that also hold BABA so I leave it to them to decide to buy/hold/sell.

I want to hold it long term. Maybe it’s a sign for me to move my ISA to a more traditional broker with those options especially as I’m now over the £85k protection and T212 not taking on UK customers for so long/bringing in new product features has me questioning it’s stability.

Hard choice as T212 fees are so goddamn low haha

Am sure you’re already aware that moving your ISA means liquidating all positions within the ISA to enable you transfer cash only element to a new broker

Yup which sucks. Sods law dictates that the market would aggressively rally during the 4 weeks I’d be transferring

You could buy an ETF or Trust that has exposure to BABA? That’s what I do, if there’s a group of companies that I like, before buying directly I check to see if I can get access to them indirectly.

Ok so it’s a bit more expensive, but your then paying someone else who works full time to decide when to buy/hold/sell and you don’t need to worry so much about keeping up to date with regulatory news and stuff.

I put half my money in a global index and half in 2-3 highly concentrated bets that I think will out perform. If my picks get too diversified I’d sooner just throw it all in the index but that’s just me.

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BABA is the third largest company in China, if China actively blocks the the VIE structure for existing US listed companies that will send a negative message which will perforate across the entire Chinese stock market. They need access to western capital in order to become the worlds largest economy and BABA is definitely going to be a key player in enabling that.

There are other potential risks, but this is likely the biggest which is why the stock is selling at such a huge discount. BABA forms a significant holding in my portfolio and I am long on this position. Did a video about this as well. Lots of great free content on Youtube available re this with other channels.

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So you think that they will allow US audits before 2023? They have never allowed this and it would be a big climb down at this point. I have seen nothing that gives me such optimism.

I agree VIE is not going to get rug pulled but that’s completely different to delisting from what I can tell.

The current auditor for BABA is PwC, which is basically an independent firm operating out of HK under the PwC banner. They can easily adhere to the US audit requirements, which I don’t believe have come into force by the SEC.

There is so much negativity on China, but they will have to play ball eventually. No country ever became great on its own. Moreso, in the internet age you need to be able to play with the western financial system.

I am sure Alibaba would love to open its books but the CCP forbids it. They are determined to a) protect Chinese data and b) get the US to accept Chinese auditing standards without US verification. They call it equivalence and they have it with the EU. The US will 100% delist Baba at the end of 2023 as things currently stand. Recent Beijing rumours point towards momentum swinging towards HK although nothing is confirmed.

I like the stock at this price but we might not be able to hold it as a US ADR with T212. Not selling my holding but it’s better to be prepared for the worst then panic selling if things go south

Yes for everyone its different but I would actually be fine and happy with it only being listed on HK, as western investors (generally speaking) are just negative on anything China, and as mainland China integrates HK into their system a HK listing makes much more sense to be the primary listing (currently the ADR is primary and HK secondary).

For me the simple question is access, can I hold it on T212? Currently only the ADR so I do, but I would happily re-buy on T212 the HK version either in ISA (ideally) or Invest account if it were to appear today as option alongside ADR.

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Exactly this hence delisting is a legitimate fear for us in terms of access.

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PwC is a global firm. The HK firm can perform audits in line with the US GAAP requirements and issue it. Another alternative is for the US firm to rely on the work performed by the HK PwC entity and issue records.
I used to work for a Big 4, although not as an accountant, I know exactly how these firms operate. The media is building the FUD. Go to YouTube and look at the CNBC analysts, the same guys that exactly one year ago were saying buy BABA are now saying you can’t own it.

Nothin in the VIE structure has changed since then except the Chinese government getting more strict. Xi wants to cripple his economy, cool story… as an investor you shouldn’t worry. What matters are the fundamentals.

Worst case you get HK listed shares instead:

sigh you won’t get HK shares with T212 you will eat the loss. It’s the SEC saying that China is in breach and China are saying they aren’t backing down.

A deal IS possible but far from inevitable. China might decide raising capital via HK is better then getting bossed about by the SEC.

Ye - I just reread the Trading212 position on this. well… Its the risk I took with buying BABA.im down quite a bit on the position already. I don’t think I want to take a loss on speculation as nothing is confirmed.

The ask from the SEC and PCAOB I just read the rule requirement is PCAOB be allowed to inspect the accounts issued by the Chinese auditors not a requirement for US audit firms… This is standard practice and there could be a compromise.

And the market HATES uncertainty. It’s crazy cheap though I’m still buying.

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Im holding fire. Its become far too dominant a position for now.

Well if it keeps dropping it may not be for too long! :slight_smile: :joy:

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