Chinese Internet ADRs sell-off is 'overdone', Citigroup says

[SINGAPORE] Didi Global's delisting plan is "an isolated case" for now and the there is nothing new in the latest disclosure requirements from US regulators may cause more Chinese companies to leave soon, according to Citigroup.

Concerns about immediate de-listings of Chinese companies' American depositary receipts are "overdone", analyst Alicia Yap wrote in a note.

"The risk of other ADRs de-listing could materialise by 2025," she said, noting that this would be after 3 consecutive years of failing to disclose mandated information starting with 2022 annual reports.

"We would view the selloff as buying opportunity for those big-cap American depositary shares that already have dual-listings in HK," she added.

The Nasdaq Golden Dragon China Index slumped 9.1 per cent on Friday (Dec 3) - the most since 2008 - and shares of Didi had a gut-wrenching ride after the Chinese ride-hailing giant announced plans to switch its listing to Hong Kong from New York just 5 months after going public.

Adding to investor unease about delistings of Chinese companies in the US, the Securities and Exchange Commission last week announced a final plan for putting together a new law that mandates foreign companies open their books to US scrutiny or risk being kicked off the New York Stock Exchange and Nasdaq within 3 years.

BLOOMBERG