Looking to Dump These 3 Possible Delisted Chinese Stocks? Let’s Take a Look.

It may seem like a constant question: buy shares of China or not? Concern No. 1 on your list of concerns could be the relationship between China and the United States, and Chinese companies are at risk of being removed from the stock market by the Securities and Exchange Commission (SEC). Should you risk investing in it anyway?

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Some Chinese companies are at risk of withdrawing from U.S. stock markets due to non-compliance with Washington’s disclosure requirements. Simply put, this means that a company is withdrawn from a stock market because the stock market forces the company to withdraw from the stock market. Should you “do business” with a communist nation that has a government that can demarcate as it sees fit?

Let’s take a look at various chopping block actions and what you might want to do about them.

Risks of investing in Chinese stocks

Withdrawal of a business means you are not listed on a major stock exchange, but you do not take ownership of the shares. You still own the shares, but of course the natural result is that the value of the company’s shares plummets.

There are other risks inherent in investing in Chinese companies, including regulations that have affected performance, espionage, and government fraud and scandals:

  • Regulations: The Chinese government has placed many restrictions and regulatory control on certain technology companies as a way to reaffirm the role of state power toward a more state-dominated economy after China opened its markets. The state has tried to cut certain large Chinese companies through regulation. However, it is worth noting that it has only begun to repress companies that have not achieved the strategic objectives of the state. However, it is possible that the government has noticed the mistakes of its ways and has shown signs of change, possibly hinting that it has tried to dominate technology platforms too much. Experts are divided on what this could mean for tech companies.
  • Global espionage: Chinese companies have been on the cutting edge of using cyber intrusions and physical theft to steal innovation from American companies. The FBI has hundreds of ongoing investigations involving the attempted theft of China-based U.S. technology.
  • Fraud and scandals: U.S. companies listed in the U.S. are known to falsify documents and make fraudulent financial reports and often exaggerate their performance through balance sheets. Take the example of Luckin Coffee. Luckin was removed from the Nasdaq stock exchange in June 2020 after falsely inflating its sales by more than $ 300 million. The company agreed to pay a $ 180 million fine to settle accounting fraud charges with the SEC.

However, leaving these flaws aside, it’s easy to see how tempting China is for ambitious investors. The market capitalization of Chinese quotes doubles that of the euro area. Despite historical, political and economic challenges, China still has great power over the growth potential of the world market and offers an infrastructure and a manufacturing base like no other.

Possible withdrawals

Withdrawn shares often continue to trade without a prescription. However, you may have to deal with higher transaction costs and wider supply and demand spreads, as well as face falling investor confidence.

JD.com Inc. (NASDAQ: JD)

JD.com, Inc. offers supply chain-based technologies and services in China, which include:

  • Computers
  • Communication products and consumer electronics
  • Appliances
  • General merchandise products, including food, beverages, and fresh produce
  • Products for babies and maternity
  • Furniture and household items
  • Cosmetics and other personal care items
  • Pharmacists
  • Health products
  • Books
  • Car accessories
  • Clothes and shoes

It also offers online marketing services for third-party merchants, as well as marketing services and omnichannel solutions for customers and offline retailers. The company also has logistics facilities and other real estate properties and offers asset management services for logistics real estate investors.

Here’s a reason you want to keep it: JD.com said it will do its best to try to maintain its list in the U.S. by continuing to comply with applicable laws and regulations in both China and the United States and maintain its been on the Nasdaq and the United States. the Hong Kong Stock Exchange. However, these efforts may not be sufficient and you may want to opt for a larger warranty.

Pinduoduo (NASDAQ: PDD)

The e-commerce platform operator Pinduoduo Inc. (PDD) has suffered a drop in shares over the past year due to regulatory crackdowns, although it has recently shown a steady rise in the stock market.

Pinduoduo Inc. operates an e-commerce platform in China and offers the following products:

  • Roba
  • Shoes
  • Bags
  • Childcare products
  • Food and drink
  • Fresh products
  • Appliances
  • Furniture
  • Household items
  • Cosmetics and other personal care items
  • Sports and fitness items
  • Car accessories

Analysts expect Pinduoduo’s revenue and net income to continue to rise and have shown that it is reasonably valued. Still, this may not be enough to influence the nervous investors who see Pinduoduo on the list to withdraw from US stocks.

Bilibili Inc. (NASDAQ: BILI)

Bilibili Inc. offers online entertainment services, including the following:

  • Video services
  • Mobile games
  • Comic and audio content
  • Professional videos generated by users
  • Live broadcast

Bilibili generates a lot of revenue with its value-added services (VAS), including sales of virtual gifts and subscriptions for live broadcasters, as well as sales of ads and their
Segment “e-commerce and others”.

Total net income in the first quarter of 2022 reached $ 797.3 million, an increase of 30% over 2021. Average monthly active users reached 293.6 million and mobile MAUs reached 276.4 million, an increase of 31% and 33% respectively compared to 2021. Average daily active users (DAU) reached 79.4 million, 32% more than in 2021. Finally, the average number of paid users monthly (MPU) reached 27.2 million, 33% more than in 2021.

Should you dump because of the withdrawal?

The SEC added more than 80 Chinese companies to a watch list, including JD.com, Bilibili and Pinduoduo. Therefore, dumping may be your best bet.

Here’s the conclusion: if you are hoping that a share withdrawn from the stock market can be resurrected, remember that it is rare for a withdrawn share to return to a major stock exchange. Solving all the financial problems and at the same time avoiding bankruptcy while refilling all the necessary financial documents does not usually happen.

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