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For NIO Inc. shares, there still exists a significant overhang that is unconnected to the firm
NIO shares fell as low as 2.4% in Monday morning's trade after CNBC published a story overnight that fuelled underlying delisting worries among U.S. investors.
-NIO was previously put on a list of Chinese equities that U.S. authorities indicated might be delisted from U.S. exchanges if they do not comply with new audit methods.
-Chinese securities officials denied investigating a plot to block delisting's.
According to the article, China's securities authority warned the financial news agency that previous allegations that Chinese officials were planning to build up a framework to prevent some businesses from being delisted from U.S. exchanges were false. Over the weekend, the Financial Times reported that a three-tiered structure was being considered as a possible compromise to American authorities to keep some firms from being delisted. A tiered structure depending on a company's level of data sensitivity might allow U.S. officials to apply their mandated audit requirements to those deemed less sensitive by China.
That would be excellent news for U.S. investors in stocks that may come into compliance more rapidly and avoid delisting. The Holding Foreign Corporations Accountable Act (HFCAA) became law in December 2020, allowing the Securities and Exchange Commission (SEC) to delist foreign companies that fail to satisfy U.S. accounting and audit requirements for three years in a row.
Even as the business develops new products and expands outside China and into Europe, the associated uncertainty has dragged on NIO stock. NIO recently announced that it will begin selling the ES7, its newest SUV, in late August, after the debut of its initial sedan variants. For the time being, though, investors appear to have brought the potential delisting problem back to the forefront of their minds.
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