The well-worn term “Knowledge is power” is usually accurate under most circumstances, however when it comes to large internet companies, there appears to be an anomaly.
Baidu, which is the Chinese technology giant that specialises in Internet-related services and products and artificial intelligence, is widely regarded as a linchpin in China’s information superhighway and a gateway to every aspect of everyday life for almost 1 billion people in the most commercially developed nation in the world.
In reality, Baidu is China’s version of Google, and therefore central to the entire functionality of the People’s Republic’s business and personal requirements.
It also has entities outside China, and is listed on New York’s NASDAQ exchange, and on the Hong Kong Exchange (HKEX).
When looking at the importance of China as a world economic superpower that the majority of industry across the globe is totally reliant on, and its own government-controlled internet system which has its own infrastructure with Baidu as a central resource behind the most sophisticated firewall on the internet, it would be a natural conclusion to draw that Baidu stock would be solid and invincible, just as that of America’s big-tech ‘FAANG’ stocks.
This is not the case, however.
Over the last month, Baidu stock has been in a continual downward direction to the extent that its Hong Kong listing has gone down in value by a remarkable 6.16% in the past day, and over 12% in the past 30 days.
Baidu is now trading at 123.40 Hong Kong dollars on the Hong Kong Exchange.
Baidu’s New York-listed stock has not fared much better, closing 2.18% down at the end of the New York trading session yesterday at $126.73 per share. That is also a 30-day low point.
This overall downward spiral has been evident for over two weeks now, as the company hangs under the uncertainty that the United States authorities may instruct NASDAQ to delist its stock.
At the end of March, the Securities and Exchange Commission (SEC) added Baidu, along with 4 other stocks of Chinese origin, to its ‘delisting watch list’.
This caused Baidu’s New York stock to fall by almost 2.6% on and its Hong Kong stock to drop by almost 3.5% on April 1, and confidence to wane overall.
It is currently understood that the SEC’s potential approach to ‘volatile’ Chinese tech stocks came from Baidu’s annual report filing at the end of 2021, which was filed with the US authorities, stating that “The Company (Baidu) understands the SEC made such identification pursuant to the Holding Foreign Companies Accountable Act and its implementation rules issued thereunder, and this indicates that the SEC determines that the Company used an auditor whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board.”
There has been no action thus far, and the stock continues to be available on both the Hong Kong Exchange and NASDAQ, however confidence is continuing to drop and despite there having been no news relating to Baidu as a corporate entity over the weekend or yesterday, today’s trading session represented a considerable drop for both listings.
It is almost impossible to estimate whether the US authorities will pursue a delisting, therefore it all hangs in the balance, but meanwhile, cautious sentiment is abound.
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