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Tuesday, January 25, 2022

Chinese social media giant Weibo’s shares fall in Hong Kong debut

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Social media giant Weibo has made its Hong Kong stock market debut as Chinese technology firms come under intense pressure at home and abroad.

Weibo’s stock dropped more than 7% on the first day of trading.

The company joins other major Chinese technology companies that are listed in both the United States and Hong Kong, such as Alibaba and JD.com.

It comes just days after Chinese ride-hailing giant Didi announced that it will relocate its listing from the United States to Hong Kong.

Weibo raised $385 million (£290 million) from its Hong Kong secondary share listing.

In the last six months, the company’s US-listed shares have lost roughly one-third of their value.

Why is Weibo listing in Hong Kong?

Trade tensions between the United States and China have risen significantly during the Trump administration and show no signs of abating under President Biden.

Chinese companies with shares listed in the United States have found themselves in the crosshairs of the world’s two largest economies.

In recent months, Beijing has increased its scrutiny of China’s largest corporations, with the technology sector receiving special attention.

Meanwhile, the US Securities and Exchange Commission (SEC) has finalised rules that would allow US-listed foreign companies to be delisted if their auditors fail to respond to regulators’ requests for information.

Some Chinese companies are now looking for alternative sources of funding in case they are forced to withdraw their shares from the US stock exchanges.

“If all Chinese companies are forced to delist from US exchanges, the results will be disastrous. Despite their fierce rivalry, the two countries require, must, and must be financially, economically, technologically, socially, and culturally interdependent “According to Nina Xiang, managing director of China Money Network in Hong Kong.

Will Weibo follow Didi out of the US?

Didi Global, the ride-hailing giant, announced last week that it would delist its shares from the New York Stock Exchange and relocate its listing to Hong Kong.

It raised $4.4 billion in its debut on the US market at the end of June, but within days, China’s internet regulator ordered online stores not to sell Didi’s app, claiming it illegally collected users’ personal data.

Didi’s announcement that it intends to delist in the United States came just hours after the SEC announced that it would proceed with its efforts to delist Chinese firms from US stock exchanges for failing to comply with new accounting rules.

Didi’s stock has dropped by more than half in the five months since it began trading in New York.

Ms Xiang believes Weibo is safe for the time being: “A lot depends on whether Chinese and American regulators can work through their differences to reach an agreement on access to auditing documents.”

What is Weibo?

Weibo is the Chinese word for microblog, and the company is widely regarded as the country’s equivalent of Twitter.

It debuted in 2009 and now has more than 570 million monthly users, compared to Twitter’s 211 million monthly users.

After Tencent’s WeChat, the company is China’s second largest social media platform.

With over 900 million users, China is the world’s largest social media market.

Because major US platforms such as Twitter and Facebook are blocked in China, the country presents enormous growth potential for domestic social media firms such as Weibo.

SourceBBC
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