Why Alibaba Stock Is Down By 5% Today

Key Insights

• U.S. regulator indicates that it is premature to discuss a deal that would keep Chinese stocks listed. 
• China has recently signaled that it was ready to disclose more information to U.S. regulators. 
• Alibaba and other Chinese stocks will remain extremely sensitive to any listing-related news. 

Alibaba Stock Falls Amid Worries Over The Potential Deal On China Stock Listings

Shares of Alibaba found themselves under pressure after U.S. audit watchdog stated that it was “premature” to talk about a deal that could keep Chinese companies listed at U.S. – based stock exchanges.

Earlier, the stock rallied after a Reuters report indicated that Chinese regulators asked some firms to prepare for additional disclosures that could keep them listed in New York. According to the report, Alibaba was one of the companies that was asked to prepare.

Alibaba stock managed to move away from multi-year lows after China’s Vice Premier Liu promised to provide supporrt to markets and economy. However, concerns about the future of the company’s U.S. listing continued to weigh on the stock. Today’s trading action highlights the market’s worries about this issue.

What’s Next For Alibaba Stock?

Alibaba stock and other Chinese stocks will remain sensitive to regulatory news. While China has signaled that it was ready to provide more information to U.S. regulators, any future deal would likely depend on the state of U.S. – China relations.

Delisting is the key risk for investors who may find themselves trapped even if the business of the company is performing well. Not surprisingly, the market reacts nervously to any negative news on this topic.

At the same time, it looks that China is worried about the rapid decline of the capitalization of Chinese stocks and is ready to provide material support to domestic companies, which is bullish for Alibaba and other Chinese stocks.

For a look at all of today’s economic events, check out our economic calendar.