NIO Plans Another Stock Listing. What It Means for Investors.

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NIO is among a number of Chinese companies at risk of being delisted in the US

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Hector Retamal/AFP via Getty Images

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The Chinese electric vehicle maker NIO (ticker: NIO) on Friday announced plans for a secondary stock listing on the Singapore stock exchange. The company’s shares are listed in New York and Hong Kong, making Singapore the third venue to trade shares.

NIO stock fell 1% in recent trading Friday. Investors might fear a dilutive stock issue, but it isn’t clear that NIO plans to issue fresh shares. The secondary listing, in fact, might actually help US shareholders. The company didn’t immediately respond to a request for comment about the listing.

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But there is another part of the news release that could help quell some more pressing investor fears. The shares traded on the Singapore exchange would be fully fungible with the stock listed in the US An investor buying shares of NIO in either location get the exact same thing.

NIO investors have had to deal with the possibility that the company’s shares could be delisted in the US because of the Holding Foreign Companies Accountable Act, which requires foreign stocks listed in the US to have an auditor that can be examined by the Public Company Accounting Oversight Board. NIO, along with many other Chinese companies listed in the US, don’t meet that criteria yet.

NIO stock fell 15.2% Thursday after it said the Securities and Exchange Commissions identified it, along with dozens of others, as being at risk of delisting—a step that would still likely happen years from now.

Listing on more exchanges helps investors, in theory, if delisting in the US actually does happen. It wouldn’t be easy, but at least US investors would have other places to sell and trade their NIO stock. NIO shares listed in Hong Kong are also fungible with the stock listed in the US

But, of course, there is no substitute for New York—it’s just a bigger market. The market capitalization of the S&P 500 is about $36 trillion. The market cap of the Hang Seng Index is about $2.7 trillion. The market cap of the main Singapore index is about $400 billion.

NIO stock’s weakness Friday is also in line with the broader market. The S&P 500 and Dow Jones Industrial Average are both off about 0.4% in early Friday trading. It has been a wild week for stock markets. The S&P rose 3% Wednesday, dropped 3.6% Thursday and is down roughly 0.2% for the week—so far.

Write to Al Root at [email protected]


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