Fate of some 250 Chinese firms on tenterhooks over delisting risks

THE fate of some 250 Chinese American depositary receipts (ADRs) - shares of non-US companies held by a US depositary bank - have come under renewed scrutiny following Weibo's crash at its Hong Kong's debut this week, as well as Didi Global's plans to quit the New York Stock Exchange (NYSE) just 5 months after going public.

The reported ban on variable interest entities (VIEs) overseas listings by Chinese regulators on Dec 1 (subsequently denied), the finalisation of US rules which threaten to delist many of the Chinese ADRs on Dec 2, and Didi's planned delisting from the NYSE, have triggered significant concerns about ADR delisting risk and the broader risk of US-China decoupling in the capital markets, Goldman Sachs said.

Its analysts said: "This has led to a renewed selloff in Chinese ADRs over the past week, and pushed the peak-to-current market value loss for China Internet to US$1.5 trillion (10 per cent of China's 2020 gross domestic product)."