Reports suggest that Baidu Inc, the search engine company from China, is thinking about delisting from the U.S. Nasdaq to move to an exchange near home, for boosting its valuation. The rumors come at a time of heightened tensions between China and the U.S. over investments.
One of the earliest listings of Chinese company in the U.S., Baidu is said to be approaching a few trusted advisors to seek ways the delisting and moving can be done, if it takes the decision to proceed. This includes highlighting any problems related to funding or regulatory reactions. The discussions seem to be at a nascent stage and could change as the talks progress.
Sources noted that Baidu believed the company was undervalued on New York’s Nasdaq exchange. According to the Baidu’s CEO and co-founder, Robin Li, a good company has several choices of markets for listing other than the U.S.
In January this year it was reported that Ctrip, Baidu and NetEase had begun preliminary discussions with Hong Kong Exchanges and Clearing with regard to a potential secondary listing like Alibaba for establishing a base of investors near China.
These new reports about Baidu have come amid the growing pressure on U.S.-listed Chinese firms, as the two largest global economies experience high tensions between them. On 20 May 2020 the U.S. senate passed a new bill for stopping China-based companies to list on U.S. exchanges without following standards for U.S. audits and regulations.
After reaching the peak price in May 2018, the shares of Baidu had dropped by over 60% even though the Nasdaq Golden Dragon China Index has plunged less than 10% across the same period. The market cap of Baidu, pegged at $29.59 billion at the time of closing on May 20, 2020, was only 5% of Alibaba’s market value. Alibaba shares are listed on Hong Kong exchange and American Depository Shares listed in New York.