NIO (NYSE: NIO) has announced that on March 10, 2022, it will be putting its shares up for trading in Hong Kong. The Chinese startup is listed in New York and is making this move as regulatory risks for other Chinese companies continue to grow in China and the United States.
However, unlike other Chinese companies that are listed in the U.S., Nio is “listing by way of introduction.” It is neither offering new shares through the listing nor raising money. It is using part of the existing shares to trade in Hong Kong.
According to a filing in the Hong Kong stock exchange, the startup will be offering stock from next Thursday under the ticker 9866. Additionally, the company also intends to list by way of introduction on the Singapore Stock Exchange. Nio adds that the shares in Singapore and Hong Kong are not exchangeable.
Washington is looking to reduce the exposure of American investors to businesses that do not abide with the country’s audit checks by delisting them. China has opposed that idea because by allowing foreign examination to local businesses, it runs a risk of having sensitive information leaked.
Last year, Chinese authorities restricted the ability of Chinese businesses to raise funds overseas. The country introduced new regulations that governed filing requirements as well as data security. This came in the wake of Didi, a Chinese ride-hailing app listed in the U.S. in June drawing attention to China’s scrutiny of national and data security. However, it remains unclear if the same rules apply to Hong Kong.
The electric vehicle (“EV”) startup has taken into consideration the new rules during the filings. The company stated that those rules would not have any effect on its operations, financial conditions and prospects.
China has its own set of regulations on driving data. Nio is qualified for Grade III in data security. According to Ziyang Fan, the head of digital trade at the World Economic Forum, Grade III is a high standard in the commercial sector. This is despite the crash in August that raised questions over the autopilot data system of Nio.
Listing by introduction can be seen as a way of avoiding cybersecurity investigations. However, according to Bruce Pang, head of macro and strategy research at China Renaissance, it gets a company to list quickly if it is not prioritizing to raise funds.
By February 25, 2022, the shares of Nio listed in the U.S. were valued at about $33.31 billion. This represents a 234.5% gain since its initial listing in September 2018 when the price of each share was $6.26. Such stock exchange activity can only mean that it is game-on for the competition between the different industry actors.
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