Fairview HK: NIO company recently soared but still shows risk factors that remain unknown to many

This is not a scare tactic. NIO rose on Friday morning as investors reacted to the company's 20F annual report, which was filed today and some positive news from China, NIO's home market.
 
CENTRAL, Hong Kong - Jan. 4, 2023 - PRLog -- However, if we go further into the annual report, one paragraph hidden within NIO's list of risk factors made us sit up and take notice. It's the type of event that, if it happens, could send stocks crashing.

Investors may be aware that international equities, particularly Chinese stocks, risk being delisted from U.S. stock exchanges if the underlying firms fail to follow the audit requirements laid forth by the U.S. Securities and Exchange Commission. The Holding Foreign Companies Accountable Act (HFCAA) was enacted by the Securities and Exchange Commission (SEC).

Foreign businesses whose audit reports have been unavailable for three years or more for the Public Company Accounting Oversight Board (PCAOB) to scrutinize will be asked to delist their shares in the United States. The SEC has recently begun publicly identifying and naming such firms. As one might expect, whenever a list of commission identified corporations (or issuers) is released, the stock values of the companies on it collapse.

"Therefore, we expect to be designated as a 'Commission Identified Issuer' shortly following the filing of this annual report on Form 20F," NIO's annual report stated.

NIO disclosed that its auditor was recognized as one of the registered public accounting firms that the PCAOB was unable to check on December 16, 2021. As a result, NIO anticipates its name appearing on one of the SEC's notorious lists in the near future. If this occurs, it might have a significant impact on investor confidence in NIO, as the SEC is concerned that foreign firms who refuse to enable scrutiny of their financial reports may be concealing vital information and deceiving investors in the United States.

Even if NIO is included to the list, it will have enough time to contest its inclusion and finally comply with the HFCAA. Furthermore, simply being mentioned by the SEC does not imply that NIO's stock will be delisted.

Fairview HK Limited is one of the foremost privately owned Asia-Pacific orientated, boutique wealth management firms in Hong Kong. We offer our services to a selected group of families, family offices, institutions and fund managers, you may visit our website https://fairviewhk.com/ or contact us via email.

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