Why are Chinese companies being delisted?

On Thursday, the SEC announced that it had finalized a rule that would force Chinese companies like Didi to hand over more financial data to regulators or face the prospect of being delisted on U.S. exchanges within three years. Shares of the Beijing-based firm have struggled in New York.

What happens if a Chinese company is delisted?

If a U.S.-listed Chinese company like DiDi delists, there are essentially three possible outcomes for investors: a share buyback, share transfer, or share limbo. They could sell their shares in over-the-counter markets—with limited liquidity—or hold on to them until a suitable listing was launched.

How many Chinese companies are listed in the US?

248 Chinese companies
As of May 5, 2021, there were 248 Chinese companies listed on these U.S. exchanges with a total market capitalization of $2.1 trillion. On October 2, 2020, when this table was last updated, there were 217 companies with a total market capitalization of $2.2 trillion.

What happens to my money if a stock is delisted?

When a company delists from a major exchange, shareholders still legally own their shares, even if they’re worthless in value. Generally speaking, delisting is regarded as a precursor to the act of declaring bankruptcy.

What US companies are owned by China?

American Companies You Didn’t Know Were Owned By Chinese Investors

• AMC. Popular cinema company AMC, short for American Multi-Cinema, has been around for over a century and is headquartered in Leawood, KS.
• General Motors.
• Spotify.
• Snapchat.
• Hilton Hotels.
• General Electric Appliance Division.
• 48 Comments.

How do I sell my delisted stock?

If you own delisted shares, you can still sell them on the Over-the-Counter Bulletin Board (OTCBB) or on the Pink Sheets, which have more relaxed regulations and few listing requirements. OTC trading is volatile, and this level of risk is typically not suitable for beginning investors.

What are the benefits of delisting?

Simply put, there are no benefits of delisting from a stock exchange. There are certain regulations and compliances that a listed company has to follow. This includes compulsorily publishing its financial statements and quarterly reports and conducting AGM every year within a time period.

Does China own Hormel?

Hormel Foods began operations in China in 1994 through Beijing Hormel Foods Co. Hormel Foods operates today in China through a wholly-owned subsidiary called Hormel (China) Investment Co., Ltd. Incorporated in Jiaxing, China.

What happens to your money if a stock is delisted?

How can I sell a delisted stock?

If a company is delisted, you are still a shareholder, to the extent of a number of shares held. And yet, you cannot sell those shares on any exchange. However, you can sell it on the over-the-counter market. This means you can look for a buyer outside the stock exchange.

Did the Senate pass a bill to delist Chinese companies from exchanges?

On 21st May, headlines on Bloomberg read: “Senate Passes Bill to Delist Chinese Companies From Exchanges”. The news triggered a -6.5\% sell off to the S&P/BNY China Select ADR Index (which tracks 48 of the largest China ADRs), on the day and day after the new broke.

Should the SEC delist foreign companies from US stock exchanges?

The proposed bill states that the SEC shall delist foreign companies from US stock exchanges, if these companies fail to comply with the country’s regulatory audits for three consecutive years. Do note that the above Bill has not yet been passed as law, as it still requires approval from the US House of Representatives, followed by President Trump.

Will China ADRs be delisted from the US market?

The bill still requires approval from the US House of Representatives, followed by President Trump before it is passed as law. China ADRs will be delisted if they fail to comply with US regulatory audits for three consecutive years.

Are US investors being forced to sell their China exposure?

According to Goldman Sachs, the forced selling is likely insignificant. Currently, approximately 41\% of US investors’ current China exposure is held via H-shares, so investing in China companies via their HK-listings could substitute US-listed ADR holdings, assuming shares are dual-listed.