Recently, the New York Stock Exchange decided to de-list a number of Chinese Telecom stocks, and are rumored to be considering delisting further stocks, including Alibaba. I have a small stake in Alibaba, so I am wondering what impact would this have on me. In particular, would I be forced to sell my shares? Would their value hit 0? Would they be transferred to a different exchange? What exactly are the consequences of these delistments for investors with active stakes?
3 Answers
If the shares are delisted from the NYSE, you will continue to own them. The question is, where will they be listed and what access will you have to those markets?
If the legislation allows OTC BB trading, it won't be as bad as the companies being delisted and subsequently only trading on foreign exchanges. Either way, the pool of buyers and sellers will be lower so liquidity will be a factor. It's hard to imagine a scenario where share price does not drop since investors are often like panicked sheep running for the door when someone yells FIRE! (sale).
I would imagine that the impact of all of this would be less on major companies with global brands who are compliant with US financial reporting requirements but that's just a guess.
answered Jan 7, 2021 at 15:44
People that want liquidity are selling, thats it. The purpose of the company doesn't change and the earnings of the company don't change because of delisting, you are still a shareholder in that.
The company isn't going private, one exchange on the planet decided to not list the shares, thats it. So people that want or require liquidity are selling.
Don't know when or where you will get liquidity. They can try listing in an exchange in another country and you can try to get an account there.
If a person wanted to keep the holdings, one can still obtain stock certificates. Ask your broker.
If the company is being de-listed because they can’t or won’t follow the transparency laws of the strongest exchange of the world, one has to wonder why.
