Shares of Chinese electric-vehicle maker NIO rose as they started trading in Singapore on Friday, the third exchange on which investors can trade the stock.
NIO (ticker: NIO) stock began trading at $16.90 and rose to as high as $20.29 on the Singapore exchange. US-listed shares of NIO shares closed Thursday on the New York Stock Exchange at $16.66.
Shares that investors own in New York, Singapore or Hong Kong — the three exchanges on which NIO shares are listed — are all the same. Small price differences might arise from day to day. If an investor could execute the trade, the investor could theoretically arbitrage those differences such as the recent 42-cent difference between New York and Singapore. That gap, excluding transaction costs, could net an arbitrageur a quick 2.5%.
“Today marks a new milestone for NIO. The listing on the SGX is of great importance to NIO’s global business development. NIO has further strengthened its footing in the global capital markets,” said NIO founder William Li in a statement emailed by the company. “By collaborating with science and research institutions and establishing NIO’s R&D center for [artificial intelligence] and [autonomous driving] in Singapore, we will further broaden and enhance our global R&D footprint.”
Another reason NIO is listing on multiple exchanges is the threat of delisting in the US Foreign companies listed on American stock exchanges have to comply with US auditing oversight standards. Foreign accounting firms — the ones that check foreign companies’ books — have to be auditable by US authorities under recently passed law.
NIO, along with many other US-listed Chinese companies, don’t meet that requirement yet. If nothing changes in coming years, that means NIO stock might be forced to leave the NYSE.
The delisting threat is one reason NIO shares have fallen in 2022. Coming into Friday, NIO’s US-listed stock has fallen 47% this year, far worse than the 18% and 14% declines of the S&P 500 and Dow Jones Industrial Average,
Delisting isnt the only reason for stock weakness. Most automotive stocks are down more than the market so far in 2022 as investors worry that inflation will cool demand for new cars while raising production costs. Tesla (TSLA) and General Motors (GM) shares, for instance, have dropped about 32% and 38%, respectively.
Write to Al Root at [email protected]
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