What happened: Chinese technology conglomerate Sina announced on Monday that it will be going private under companies associated with its CEO, Charles Chao. The group will pay around $2.59 billion for remaining shares, according to Nasdaq, though the buyout bid is at a marginal increase from the previously proposed price. According to terms of the agreement, investors are paying $43.30-per-share in cash for the Nasdaq-listed stock of the company.
Jing Take: Sina, which owns the Chinese social media platform Weibo, has traded on Nasdaq since 2000, and this US stock exchange delisting is a sign of further turbulence ahead. After President Trump has threatened to delist all Chinese companies from the stock exchange, and the US Senate approved the Holding Foreign Companies Accountable Act (HFCAA), various Chinese companies have gone on to pursue secondary listings in Hong Kong or have delisted from US stock markets.
But ousting Chinese companies or encouraging them to delist from US stock markets could be a costly mistake. The move is good news for Beijing since most Chinese tech companies will choose Hong Kong as their alternative.
Hong Kong, which suffered immensely under protests and challenges from COVID-19, has lost its luster with global and Mainland investors. But bringing Chinese tech giants to the Hong Kong exchange will raise the city’s prestige again and should reinforce its role as a dominant financial player. It will also be a victory for the National Security Law, as it will force Chinese tech companies to hand over information about their users. Plus, the geographical proximity to China will give Beijing greater control over these companies.
All of this can only offer American investors bad outcomes. “Unfortunately, I think the money that American investors have already paid for stocks in Chinese companies — especially money that’s gone back to Mainland China — is basically money that these people may never see again,” said Jesse Fried, a professor of law at the Harvard Law School, to CNBC. “But there’s not really that much you can do to protect them at this point.”
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.
