Alibaba Plunges Below First-Day Closing Price in 2014. Golden Dragon China ETF Plunges Below its 2007 Price

The massacre of the China ADRs. Dip buyers got taken out on stretchers.

By Wolf Richter for WOLF STREET.

Folks who’ve tried to ride up the Chinese miracle economy by investing in American Depositary Receipts (ADRs) of Chinese companies, such as Alibaba, Baidu, and, have ended up in a toxic devastating mess. Dip buyers, if they didn’t get out in a New York minute, were carried out on stretchers. Wall Street investment banks that had been instrumental in listing these ADRs raked in large amounts in fees. And the actual Chinese companies in China raked in the funds that investors in the US forked over to buy these misbegotten ADRs at the time they were offered.

There are over 200 China ADRs traded on US stock exchanges. Last year, before it all came apart, they still had a combined market cap over around $2 trillion. Today was another day when dip buyers in these ADRs got their heads handed to them.

Alibaba’s ADR, which plunged 7.9% today, is down 70.9% from its high in October 2020. At today’s closing price of $92.92, the ADR is below where it had closed on the first day of trading on September 19, 2014 ($93.89):

Baidu’s ADR dropped 6.3% today and is down 59.9% from the peak in February 2021. Today’s price of $134.62 is below where it had first been in March 2011.

KE Holding, a platform for housing transactions, was the biggest plunger today among the biggest ADRs, collapsed by 23.9% today, to $11.01 and is down 67% from its first-day closing price on August 13, 2020.

Here are some of the biggest ADRs, the plunge today, and the plunge from their highs.

Company ADR Price $ Today From high Date of high
Baidu [BIDU] 136.16 -6.3% -59.9% 19-Feb-21
Alibaba [BABA] 92.92 -7.9% -70.9% 27-Oct-20
NetEase [NTES] 81.75 -7.3% -38.3% 09-Feb-21 [JD] 52.73 -15.8% -51.3% 17-Feb-21
NIO [NIO] 17.70 -11.9% -73.6% 11-Jan-21 [TCOM] 21.50 -12.1% -64.3% 31-Jul-17
Pinduoduo [PDD] 35.75 -17.5% -83.2% 16-Feb-21
ZTO Express [ZTO] 25.80 -7.5% -33.2% 14-Jun-20
KE Holdings [BEKE] 11.20 -23.9% -85.4% 22-Feb-21
Li Auto [LI] 25.99 -5.9% -45.5% 24-Nov-20
Didi [DIDI] 3.40 -10.6% -81.1% 01-Jul-21

The Invesco Golden Dragon China ETF [PGJ], which holds these and numerous other ADRs, plunged 10.2% for the day to $26.73, and is down 69% from the peak in February 2021 – yup, that February again after which all kinds of stuff game unglued.

This $26.73 is an astonishing number: the ETF has now plunged below the price it had first reached in 2007, during the China stock market bubble in the run-up to the Beijing Olympics:

One of the triggers today…

Ecommerce giant reported fourth-quarter earnings today, which included a net loss of 5.2 billion yuan, on increasing operating costs, compared to a profit of 24.3 billion yuan a year ago. Revenue growth slowed, amid slower consumer spending in China. And the ADR got crushed today: -15.8%, and is down 51.3% from its high.

Last month, Alibaba reported its slowest revenue growth since the ADR was listed in the US. So there’s that: Slowing growth of consumer spending in China. And ecommerce giants are feeling it.

Another trigger today: The threat of delisting moved closer.

These are big companies in China. But if you own the ADR you don’t own a stake in the big company in China; you own a stake in a mailbox corporation in the Cayman Islands or in some other offshore haven that has a contract with an entity of the big company in China.

That system was designed with a dual purpose: To get around regulations in China and to get around financial disclosure regulations in the US. Now both China and the US are cracking down on this scheme.

In the US, the SEC is cracking down under the Holding Foreign Companies Accountable Act, signed into law in late 2020. The Act bans trading of ADRs of foreign companies whose audit working papers cannot be inspected by the SEC for three years in a row. Under the Act, the companies need to use accounting firms or branches that the Public Company Accounting Oversight Board is able to fully inspect and investigate, as it does with US companies. If a company is not in compliance, its ADR can be delisted from US exchanges.

Today, the SEC issued an update about five companies, including some Chinese companies, whose accounting firms or branches cannot be adequately inspected. Those five companies were “provisionally identified” on March 8.

In the update today, the SEC said that these five companies have until March 29 “to contact Commission staff … if they believe they have been incorrectly identified, and should include evidentiary support with their correspondence.” If these companies cannot rectify the issue, the ADRs may be delisted.

None of the big Chinese companies I’m discussing here were mentioned in the SEC update, but the fact that the SEC is actually moving forward with this is jostling the animal spirits.

In China, regulators are cracking down on big tech and social media companies – the very ones discussed here, particularly Alibaba – as President Xi Jinping is trying to tighten control over the corporate giants.

Alibaba was made an example of in November 2020, when the government forced it to scuttle the mega-IPO in Shanghai and Hong Kong of its huge insurance and financial services unit, Ant Group. Prospects of the mega-IPO had inflated Alibaba’s ADR to new highs by late October 2020. Upon the news, shares plunged and continued to plunge. It taught Alibaba founder Jack Ma – and investors in ADRs – a lesson about who is boss in the house of Xi.

In 2021, the Chinese government tried to get ride-hailing giant Didi Global to put on hold the listing of its ADR on the NYSE until the audit working paper issues could be resolved. The Chinese government considered these audits a national security issue and fretted that audits would give the US government access to information about Didi’s clients in China.

But Didi went ahead anyway, and on June 30, 2020, listed the ADR. In response, Chinese regulators unleashed investigations and ordered the company to stop registering new users. The ADR collapsed, to $3.40 today, down 81% from the high on the second day of trading.

There were numerous such crackdowns on the biggest hype-and-hoopla industries, tech, social media, online gaming, and other internet companies for their monopolistic size and practices and other issues. There’s a crackdown on education tech companies that sell off-campus courses that caused the cost of education to skyrocket, thereby apparently discouraging Chinese couples from having more than one child.

Many of these companies issued ADRs in the US, and those hapless souls that got caught with China ADRs in their portfolios have been living through a nightmare.

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  78 comments for “Alibaba Plunges Below First-Day Closing Price in 2014. Golden Dragon China ETF Plunges Below its 2007 Price

  1. Jpollard says:

    An excellent analysis of the problems facing Chinese ADRs
    Add in the geopolitical risk and you have a recipe for an even greater disaster .

    • VintageVNvet says:

      10-4, and very important that China and USA appear to be working together, at least to some extent, to deal with this.
      Good sign, eh

    • perpetual perp says:

      I agree. But you left out that China took out crypto.

    • NBay says:

      I always thought didi was a Vietnamese word….look like they share a lot of words with China….anyway I get it.

      As for the other companies named, didi mau! sounds right.

  2. BuySome says:

    All of which proves the mafia was right, people really will cross a desert for a chance to throw away money.

  3. Prince Gbanga says:

    Why do people buy these fraudballs in the first place?

    ADR? Really? It’s like an IOU for a mortagage of a hypothecated promise.

    • Degobah Smith says:

      “When free money rains from the sky, even worthless baubles glisten for a time.”

      – Not an Ancient Chinese Proverb (but maybe should be)

    • Mud says:

      As long as hedge funds and connected make money it’s OK

  4. Prince Gbanga says:

    > they still had a combined market cap over around $2 trillion

    I assume this is the market cap of all shares (both ADR in the US, unregistered/privately held overseas, and traded on non-US exchanges).

    Does anybody know where to find the total market cap of *only* the ADR shares traded on US exchanges?

    That would basically be the amount of money China is going to fleece us for when things go south. Wondering how that compares to the amount of US debt they hold. It’d be a shame if those numbers matched up…

    • andy says:

      $2T was like $6T just last year. Already happened. Not that the media report it. Once Tencent stops going down, Chinese “tech” may actually be s good buy.
      We still have $10T in our own “tech”.

    • Augustus Frost says:

      Don’t worry, the US economy has already come out ahead by exchanging USD fiat for real stuff over the last several decades. Much of this stuff is low quality garbage but still worth more than intrinsically worthless fiat currency or overpriced USD financial “investments”.

      Besides, if US based “investors” had not lost money here, they almost certainly will lose it eventually when the US mania ends.

  5. fred flintstone says:

    As the Cold War 2 starts up and China sides with Russia and indirectly India…..any company that has large operations in China….not so good.
    Look what they did to Apple today. A company with a huge market cap and the leading stock of the market. Even with Buffetts political support Apple might be a prime target.

    • Augustus Frost says:

      I don’t India is going to be a long-term ally of China. They aren’t now to my knowledge but regional rivals.

      With China on one side and Islamic nations on the other, they have a lot more common cause with the US and the western alliance.

    • Sit23 says:

      India is flat out importing heaps of coal from Aussie to run their new factories which are taking a lot of work off Chinese coal fired factories.
      If you check your history, India has never ever been China’s friend.

  6. TimTim says:

    Slow moving train crash coming to a final dénouement, such huge numbers.

    Coming the other way around the globe is the European Bank Death Express.

    Huge numbers there too in all likelihood.

  7. Zark Muckerberg says:

    Shysters everywhere 💸

    Will this be bigger than the Madoff debacle?

  8. CRV says:

    To add to Alibaba’s demise is the fact that in Europe it can no longer sell low value items without paying VAT. Also free shipping has become more difficult. I had a look on AliExpress two weeks ago and prices are still much lower than in Europe, but way up from what it was before. Also, a lot of the same goods can now be bought via Amazon and other online platforms with lesser delivery times, due to Chinese warehouses strategically placed in Europe. Despite the somewhat higher pricing this does take away customers from Alibaba. People want their goods this week instead of in three months. And are willing to pay some more for that.

    • andy says:

      Agree. Amazon is like Sears with a website. Just need to build the world’s tallest tower. Or fly to space or something.

      • Jay says:

        The sad thing is, if Sears would have built a website and functionally tied it to their system, there would have never been an Amazon. They had the mail order system…

        • Bobber says:

          Why feel sad for dumb? Praise ingenuity.

        • Apple says:

          No way Sears could have competed with Amazon.

          Walmart has been trying for 25 years.

        • VintageVNvet says:

          YOU are absolutely correct Jay:
          ”Sears and Sawbuck” WAS the Amazon of the 19th and early 20th century, based on the best technology of that time.
          IF, and of course it’s a HUGE IF, they had been ”nimble” enough to transition to the best technology of the internet era,,, they would still be the best.
          That Sears did NOT do that can be ascribed to the usual and almost always tendency of each and every ”beau-racracy” to become an island unto itself, as has been seen and proven time and again,,,
          THE most important challenge for WE the PEONs going forward with hopium.

  9. AverageCommenter says:

    Retail investors gotta stay aware of what’s going on in the world & how that will effect the stocks they invest in. 1-month ago Putin met with Xi Jinping. Believe me, he didn’t invade Ukraine without getting the nod from China to do so because ultimately that’s the only other power that can have a devastating effect to “The West” either militarily or economically. The belligerents in the current world tensions have already been identified, it’s just a matter time before people show their hand. It’s best for now to avoid any China/Russian linked stocks til all this blows over. That’s if it blows over.

    • Mud says:

      China is smarter than Russia -USA ,will let us destroy each other ,than become world leader ,with no conflict

  10. Djreef says:

    The CCP desperately needs to change direction, or there may be nothing left by the time this is all over.

    It’s time for change.

    • TimTim says:

      They have that down, it’s a new digital central bank currency backed up by a social credit score..

      Admittedly, the latter is in place already and the former isn’t going down well, according to some accounts.

      They’ll be made to work well, notwithstanding.

      I doubt much will change, bar perhaps an increase in quiet disappearances from social media.

    • John H. says:

      “ The CCP desperately needs to change direction…”

      Perhaps they could come up with a marketing catch-phrase… the Cultural Revolution, or maybe the Great Leap Forward.

      • phoenix says:

        Build back better is already taken

        • Sit23 says:

          But it has never been used. Surely there is a clause that says if one does not actually start building back better at all for a certain period of time, one’s exclusive right to the phrase lapses.

        • BuySome says:

          What is this, Tin Pan Alley where everyone’s trying to copyright the latest cheese? Ok, here we goes–>> “Dressing like a weekend Vineyard slooper, Buying up patents on the best damn pooper scooper, Souper Duper! Come let’s mix, Where Rockerfellers carry bricks, So they can stone the rabble hicks, While stealing bowls of Trix.”

  11. YuShan says:

    This is even more evidence of globalization shattering to pieces. There will be more barriers, protectionism and even nationalizations from here on. And these additional risks don’t seem be be priced in at all yet in the broader market.

    • Jack says:

      No it is Not!

      Globalization was a concept introduced by the western well connected economic think tanks to destroy the labour markets in their home countries and plunder entire countries offshore!

      The real globalization should begin now, where freedom of movement for capital and labour should be negotiated on EQUAL FOOTING!

      a foreign concept? I know, anything that doesn’t revolve around the arses inhabiting the swamps doesn’t feel like Fair!!

      Once the SWIFT is SHOT DEAD , it will be a real globalization of greater magnitude and meaningfulness to both ends of the trade.

      Latin America can attest to that,
      Asia can attest to that, and Africa can attest to that as well.

      That all should become clearer in the next 2-5 years.

      If we don’t get pulverized in the interim 😂 .

      • Augustus Frost says:

        The inferred outcome from your proposal with free movement of labor would balkanize every country where large scale immigration is attractive.

        The more prosperous affluent countries would be overpopulated and ruined even faster than is occurring now.

        More voting for “free” benefits at someone else’s expense.

        I can’t think of a worse idea than this one.

        No one is entitled to live wherever they want and change a society to resemble the one they left which is exactly what is happening in the US and Europe.

        • Wolfbay says:

          Free migration would lead to equal outcome. Everywhere would become equally third world.

        • Jack says:


          Your last paragraph answers your questions/dilemma !

          Have another scotch, and sit down on a comfortable chair/floor/grass, and look around you( if you’re in the us).

          what happened to this country was its own making, once you’ve interfered in enough countries, you’ve bought their little and big problems.

          In fact you’ve essentially imported their mindset and inner workings into the “land of the free” the land that it’s inhabitants are progressively becoming SLAVES to much more concentrated circles of CLOWNS!!

          Actually Wolf wouldn’t be having hay day in writing consistently about the position of the “ American DEBT SLAVES” on regular basis 😂😂😂

          So , the idea of FAIR , in my proposition/ contemplation is BY NO MEANS UNIQUE or foreign to the history of societies as you know .

          Addressing your concerns is NOT my point.

          What I would like you to fathom or contemplate is that a world with multi polar powers is ultimately a better place than a world lead by a single maniac ( wouldn’t you agree)?

          There are so many wrongs in this current post WWII system, that can be exploded and create a better world!

          Take the “ SECURITY COUNCIL “ concept, the Veto concept, the human rights charter , the UN 🤣🤣🤣

          In the economic sphere, look at the continuum of FARCE that the us is selling to the world! The paper money that is running out of puff! The SWIFT!!

          If you create an international trade and exchange system on “ fair basis “ and then use it to exclude WHOLE NATIONS ( nations that you UNFRIEND 🤣🤣) , that strikes me and many others of heights of hubris and hypocrisy!

          India , Brazil, Germany, Nigeria, Egypt Turkey, Indonesia and many other would agree!!

          Fairness is the ultimate goal.
          Happiness is the outcome…” in pursuit of happiness…”

          Isn’t that ultimately what our forefathers in the us tried and to some extent succeeded in spreading? ( read your history without bias).

          Democracy is/ has/ will be forever USED as a weapon to spread the ( antithesis) of what it means, throughout history (the Greeks, the French Revolution, the American Revolution…etc)!!!

          You might consider that can lower the quality of life/ lives in the western countries! But isn’t that the primary cause for the genocide that occurred/ occurring in three continents NOW?!

          Technology isn’t/ doesn’t happen without two main factors, the human imagination and the physical environment ( capital and materials) , where do you think is capital, and materials coming from?

          Is every ( inch)part of the us continental sphere being mined and exploited ?and is that enough for the 300million inhabitants to secure a better future?

          We are interdependent on each other as a species, this is what kept us from being extinct ( so far)!

          It is hard and possibly immoral to attack and shoot down every single idea that differs from your own, this however leaves the door wide open to ideas like the clownish MMT to proliferate and find footing in so called ( developed societies, like yours!),
          But that is the nature of human beings .

          The difference in my proposition is , you include the people that you trade with in your vision!

          If you’re an entrepreneur, you’d like to lift your customers to a level that make them understand the benefits of using your product/ idea.

          You also have to be open minded about using/ purchasing their products/ideas if they have one to sell!

          I might’ve strayed a bit !

          Hope you enjoyed your scotch 😄


      • OutWest says:

        “The real globalization should begin now, where freedom of movement for capital and labour should be negotiated on EQUAL FOOTING!”

        Sounds like a race to the bottom to me. Should that freedom of movement of capital and labor actually occur lts say in the next few decades, wouldn’t the average american be even more broke?

        • Jack says:

          There wouldn’t be any need for any person to uproot their family and carry themselves across oceans to go and live in a strange culture!

          Nobody wants that if they’re not forced to!

          Ask the NICARAGUANS wether they would’ve preferred to live in their country that got decimated to protect a “ FRUIT COMPANY “?!!!

          you’re very superficial sonny. Before you spout BS , read it and think about it!

          Don’t take it personally.

      • VintageVNvet says:

        good one Jack, and gotta agree totally on the vast possibilities you suggest!!!
        thanks, and please continue to share your thoughts on here!

      • buda atum says:

        Actually, globalisation is me in my African village seeing what you got and wanting some for myself.

        Think, car, iPhone, constant electric, water, democracy, security, etc

        • jack says:

          Turn off your TV, and head to AFRICA FFS!!

          You’re being brainwashed..totally.

          No one is espousing you decouple from your beloved IPHONE 🤣🤣

          But life has larger extents than that small screen to offer you.

    • Petunia says:

      The financialization of everything is definitely on a downward spiral. Chinese ADRs were a bad joke and yet they were purchased when holding the Yuan was an obvious better bet. The only paper worth holding now is cash of any kind.

  12. David Hall says:

    China is going through a foreclosure crisis. Too many foreclosed homes for sale, not enough buyers. Residential tower construction sites shut down before completion.

    • RedRaider says:

      When wages don’t keep up with inflation isn’t a foreclosure crisis what the USA is facing too?

      • AlamedaRenter says:

        Layoff start this summer. Foreclosures start in winter 22/23

        • phleep says:

          Hopefully only partying like it is 2008. Because partying like it is 1914 or 1938 aint nearly so nice. Especially with the stakes at the table in a post-Hiroshima world. The daily stresses of COVID and Ukraine will seem like a calm day in the park.

  13. Winston says:

    As Kyle Bass has pointed out, besides Chinese companies not being required to meet US auditing standards (such as they are…), when you own Chinese stock, you actually -OWN- nothing even without any kind of fraud being involved.

    On the amount of fraud, do yourself a big favor and watch the excellent 2018 documentary “The China Hustle,” made by the producers of “Enron: The Smartest Guys in the Room,” a free view for Amazon Prime customers. Just what you’d expect from the country that sold deadly baby formula. At least that generated enough very bad world press that the culprits were executed.

  14. Xavier Caveat says:

    The issue with buying dodgy Chinese stocks is, 20 minutes later you’re hungry for more.

    • Mr. Nobody says:

      I just about blew coffee all over my screen with that one.


    • Jack says:


      These companies where making tremendous amounts of money, and paying handsome returns until the last couple of years!

      Hence the popularity of these schemes that Richer chap is talking about. It is Not a new concept to be all of sudden the centerpiece of the SEC’s diligence as if by miracle!!

      The SEC’s should be more inclined to CLEAN UP their arses and prove that they’re earning their keep by going after all those CONGRESS MEN AND WOMEN insider trading day and night “ of course in the service of their constituents “😂😂

      And while at it many should make these information more public to the wider community .

      The average punter is having a heart attack just watching the gas prices going through the roof now, how decent is it for your reps to be swimming in dough while you’re in the mud?!!

      on a funny note I saw a meme with a photo of gas station prices written as follows



  15. joe2 says:

    Ali Baba has good stuff way cheap. Less than 50% of what the US sellers charge. But US customs will block your shipment.

    I find that US Customs will not block Amazon shipments but will block Ali Baba shipments. Make what you will of that.

    • Xavier Caveat says:

      That takes all the fun out of buying fake name brand merchandise for half price.

  16. cobo says:

    “Dip buyers, if they didn’t get out in a New York minute, were carried out on stretchers.” Brilliant! Just Brilliant!!

  17. Anon1970 says:

    Wolf, is anyone keeping track of the losses taken by Americans on companies that appeared on Trump’s list of prohibited Chinese companies that came out in Nov. 2020? The list was revised slightly by the Biden Treasury Department and investors were given until June 2022 to get rid of them. If investors don’t sell them by the deadline, their broker is required to block the shares until the Executive Order is lifted. During this time, they don’t receive their dividends and thyey can’t sell the shares or transfer them to anyone else. You can convert your ADR’s into the underlying Chinese shares and sell them on a stock exchange in China before the deadline, but you will be hit with a ton of fees. Check with your brokerage firm for its fees.

  18. Nothing wrong with the ADR its the companies. I might blame that on reduced capability of drop shipping from China and maybe the Chinese currency. Their covid lockdown is pretty harsh. And the central committee wants to see more internal growth. Then anyone who does business with Russia is subject to sanctions. There’s almost always a dip to buy, just a matter of knowing which one.

    • Wolf Richter says:

      Turns out, yesterday’s huge plunge wasn’t the dip to buy. The Golden Dragon China ETF [PGJ] is down another 7.7% at the moment today.

      When you look at the past year, the dips were deep, and the bounces were small, and that’s how it ratcheted down so far so fast. It’s very hard to make any kind of money for dip buyers in this scenario, and if you don’t get out in time, you get dragged down to the next lower level.

      With the China ADRs, there’s the additional problem: you don’t own a stake in the actual company in China. If a US stock gets delisted, you still own your share of the US corporation, you just cannot sell that share very easily. If the corporation lives on, you retain your stake. But with these ADRs, you own a stake in a mailbox address in the Cayman islands.

      • Alibaba HK for instance is down about 50% the last year and the ADR is down 64%. Some of these actually have dividends. The SEC is non sequitur. China just logged its worst GDP in decades, and they cut interest rates. I think some of the big global players are ready to buy the dip. (Druckenmiller?) but the play being talked up is Chinese sovereign bonds. China is definitely not going to fall apart like Russia by launching an ill advised military adventure.

        • Wolf Richter says:

          Ambrose Bierce,

          Alibaba’s Hong Kong shares actually convey ownership in the company, unlike ADRs. With these ADRs you get ownership in a mailbox company.

          As retail investor with those ADRs, when the funds are pulling out (and they’re now doing that), liquidity disappears and it’s even harder to sell the ADRs without causing the price to crash further. The ADR of Alibaba can go to zero while Alibaba, the company, is alive and well.

          I think people are in denial about what these China ADRs are structurally. I’ve been screaming about them for years. They should have never been issued this way.

      • AV8R says:

        Can’t wait to see the effect these and other implosions will have on margin debt totals for the end of March.

  19. Dagny says:

    KWEB, Chinese internet companies ADR ETF is another of these collapsing wonders. At some point, I know not where, there will be a screaming buy in this space. I wait for a point “below known values”, very carefully.

    • Xavier Caveat says:

      Did the inspiration for NTF’s come from how easily people fell for ETF’s?

    • sunny129 says:


      How do you know their ‘ below known values’ ?

      Same can be said of US mkts where the price discovery has been suppressed since ’09. I will start to think of the ‘fair value’ when the prices plunges 60% or more! We have a long way to go!

  20. #42 says:

    Great post Wolf. Basket catch.

  21. NJB says:

    Most Chinese ADRs actually have dual listed HK shares. They’re also fully fungible. For example, the holder of an Alibaba ADR can freely convert these shares into 8 Alibaba HK shares (9988 HK). Hence there is no risk that investors will be left with a worthless investment if the US shares are delisted.

    • Anon1970 says:

      Converting ADR’s to their underlying HK shares is definitely not free. And the various fees levied by the HK stock exchange and by your broker can be significant.

      • NJB says:

        Please see my comment to Wolf’s post. The costs are low enough to ensure that the US ADR price will closely track the HK listed price.

    • Wolf Richter says:


      OK, item by item:

      1. “Most Chinese ADRs actually have dual listed HK shares.”

      Nonsense. About 16 or so have a dual listing in HK, out of 200+ China ADRs. Didi’s HK listing just got put on hold too. Many others don’t qualify to list in HK.

      2. “the holder of an Alibaba ADR can freely convert these shares into 8 Alibaba HK shares (9988 HK).”

      That’s a good one. Institutional investors can convert — and they’ve been doing it, which is part of the problem because it removes liquidity from the US-traded ADRs and is in part responsible for the huge price drops.

      But individual investors in the US cannot swap unless their broker lets them trade on the Hong Kong stock exchange. Most individual investors have to sell the BABA ADR to get out.

      • NJB says:

        Thanks for responding. Of the big, liquid companies, most have HK listings. I should have included this qualifier. This includes Alibaba, Baidu,, NIO and a host of others that I am familiar with. Institutional investors can convert the ADRs into HK listed shares. This means that the ADR price will track the HK price. Otherwise there would be an arbitrage opportunity. As a result retail investors don’t have to worry about the share price becoming worthless. I think it’s very important that investors are aware of this issue.

  22. NJB says:

    It is important to recognise the delisting threat is purely a liquidity issue. It doesn’t impact the companies’ fundamentals. It’s my view that most Chinese companies will ultimately be forced to delist from the United States, but it doesn’t matter. Most of the companies have strong balance sheets and don’t need access to US capital markets. And most of the companies either have HK listings or can get one. The exception is Didi which never should have listed in the first place given the Chinese regulator was against such a move (Softbank effectively pushed this through). China has forced the company to delist from the US and the regulator has rejected the HK listing. As things currently stand, investors will be forced to trade these shares OTC.

    However, this is very much the exception. Consider, for example, Alibaba and Both are very solid companies with net cash on their balance sheets (and in the case of Alibaba, the net cash is now a significant percentage of its market cap). Despite the recent share price action, JD also recently reported a robust result. And no matter how you slice and dice the data, Alibaba is extremely cheap. It is now trading on a single digit cashflow multiple and, although its growth has slowed, it is still growing revenues, cashflows and earnings at an impressive rate. And importantly, both companies have fully fungible dual listings in HK.

    There is a tail risk that Chinese companies could be placed on a US investor embargo list, like the big 3 telecoms stocks (China Mobile, China Unicom and China Telecom) which had perceived links to the US military. However, even this event isn’t a big deal as it doesn’t affect fundamental valuations. This embargo news sent the shares down but it the impact was short-lived. The shares are now trading well above the embargo lows.

  23. CanCan says:

    ACMR headquarter is in USA. it is an American company. It has a Chinese subsidiary. I own this stock. I have been wondering why it is a target.

    Can this be a political move because there are many US listed companies with Chinese subsidiaries. There are many US companies that are headquartered elsewhere to boot.

    Is this a way to make profit from stock delisting fears. Can someone explain what is going on.

    • Wolf Richter says:

      This isn’t about where the company is headquartered, but whether or not the Public Company Accounting Oversight Board can investigate the audit documents. If the audit documents are in China and cannot be investigated, or if there are no audit documents, it’s going to be a problem.

    • Isaac S. says:


      see ACMR’s statement on that, w/ my key snip. I own lots of DQ, and now I’m scrambling to see what to do. I’m thinking of moving it lateral to an HK dual listed China high flier like Alibaba, Baidu, etc.. what a mess!

      ACM Research Comments on Latest SEC Announcements Regarding Holding Foreign Companies Accountable Act

      ACM anticipates additional companies with relatively later filing schedules will appear on subsequent provisional lists as those companies file their respective annual reports. ACM’s appearance on the provisional list does not mean ACM will be delisted soon, or at all. According to SEC guidelines, the earliest a trading prohibition could be invoked is 2024, once an issuer has appeared on the SEC’s provisional lists for three consecutive years, 2022, 2023 and 2024.

      Moreover, ACM is implementing plans to identify and appoint an independent public accounting firm that is subject to inspection by the PCAOB, in order that in the future ACM will no longer appear on the SEC’s provisional lists and will no longer be subject to the related delisting guidelines. “ACM has already begun to interview potential U.S. auditors to comply with the guidelines,” said Dr. David Wang, President and Chief Executive Officer of ACM. “As we announced on December 7, 2021, we are confident in our ability to meet the SEC requirements in advance of the 2024 deadline, and we remain committed to our NASDAQ listing status.”

    • Isaac S. says:


      CSIQ’s risks section seems much more honest than ASML’s PR statement I posted.  See below link, search for “accounting firm” .The PRC will not allow any financial inspections, so they will get delisted, esp. given that PRC is not joining w/ outcast Russia.  I’ve got allot of DQ and OIIM thinking they were very legit companies.  So, I’m thinking to move those over to BIDU based on the theory that their HK convertibility should put a floor on the shares based on arbitrage value.  Might open an investor’s broker account for HK trading access.  If Bidu in HK is still trading close its US ADR then selling the US ADR and buying the HK listing would be a way to keep the same relative value profile.  a real mess!

  24. joe2 says:

    All I can say from my experience about Ali Baba is that most sellers seem honest with very low prices reflecting the source manufacturers cost without the parasites adding on like 500%.

    However, the US Customs folks have blocked a lot from Ali Baba. Amazon shipments, however, are not questioned.

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